There is a growing body of evidence to implicate reversible tyrosine phosphorylation as an important mechanism in the control of the adhesive function of cadherins. We previously demonstrated that the receptor protein tyrosine phosphatase PTPmu associates with the cadherin-catenin complex in various tissues and cells and, therefore, may be a component of such a regulatory mechanism (Brady-Kalnay, S. M., D.L. Rimm, and N.K. Tonks. 1995. J. Cell Biol. 130:977- 986). In this study, we present further characterization of this interaction using a variety of systems. We observed that PTPmu interacted with N-cadherin, E-cadherin, and cadherin-4 (also called R-cadherin) in extracts of rat lung. We observed a direct interaction between PTPmu and E-cadherin after coexpression in Sf9 cells. In WC5 cells, which express a temperature-sensitive mutant form of v-Src, the complex between PTPmu and E-cadherin was dynamic, and conditions that resulted in tyrosine phosphorylation of E-cadherin were associated with dissociation of PTPmu from the complex. Furthermore, we have demonstrated that the COOH-terminal 38 residues of the cytoplasmic segment of E-cadherin was required for association with PTPmu in WC5 cells. Zondag et al. (Zondag, G., W. Moolenaar, and M. Gebbink. 1996. J. Cell Biol. 134: 1513-1517) have asserted that the association we observed between PTPmu and the cadherin-catenin complex in immunoprecipitates of the phosphatase arises from nonspecific cross-reactivity between BK2, our antibody to PTPmu, and cadherins. In this study we have confirmed our initial observation and demonstrated the presence of cadherin in immunoprecipitates of PTPmu obtained with three antibodies that recognize distinct epitopes in the phosphatase. In addition, we have demonstrated directly that the anti-PTPmu antibody BK2 that we used initially did not cross-react with cadherin. Our data reinforce the observation of an interaction between PTPmu and E-cadherin in vitro and in vivo, further emphasizing the potential importance of reversible tyrosine phosphorylation in regulating cadherin function.