The murine phosphotyrosine phosphatase, Syp, is a widely-expressed cytoplasmic enzyme that contains two SH2 domains. Syp is physically associated with activated receptors for epidermal growth factor (EGF) and platelet-derived growth factor (PDGF), apparently through its SH2 domains. This phosphatase is rapidly phosphorylated in cells treated with PDGF or EGF, and is constitutively phosphorylated in v-src transformed cells. Here we report that either the N-terminal or C-terminal Syp SH2 domain alone bound to the activated beta PDGF receptor or EGF-receptor in vitro, and that the two SH2 domains linked together exhibited synergistic binding. Substitution of the Tyr1009 autophosphorylation site in the C-terminal tail of activated beta PDGFR with Phe abolished the in vitro binding of either SH2 domain to the activated receptor. A 9 amino acid phosphopeptide corresponding to the Tyr1009 autophosphorylation site of the beta PDGFR inhibited association of the Syp SH2 domains with the receptor. These results indicate that the Syp SH2 domains have an intrinsic specificity for the Tyr1009 autophosphorylation site of the beta PDGFR that dictates binding of the intact Syp phosphatase, and suggest that both SH2 domains have a related binding specificity. Phosphoamino acid analysis of Syp from PDGF-stimulated cells indicated that PDGF primarily induces Syp phosphorylation on tyrosine residues. The mouse Syp gene has been mapped to chromosome 5F region by the fluorescence in situ hybridization. These findings suggest specific functions for Syp in signal transduction downstream of receptor tyrosine kinases.