Protein tyrosine phosphorylation is important in the regulation of cell growth, the cell cycle, and malignant transformation. We have cloned a cDNA that encodes a cytosolic protein-tyrosine-phosphatase (PTPase), MEG2, from MEG-01 cell and human umbilical vein endothelial cell cDNA libraries. The 4-kilobase cDNA sequence of PTPase MEG2 corresponds in length to the mRNA transcript detected by Northern blotting. The predicted open reading frame encodes a 68-kDa protein composed of 593 amino acids and has no apparent signal or transmembrane sequences, suggesting that it is a cytosolic protein. The C-terminal region has a PTPase catalytic domain that has 30-40% amino acid identity to other known PTPases. The N-terminal region has 254 amino acids that are 28% identical to cellular retinaldehyde-binding protein and 24% identical to yeast SEC14p, a protein that has phosphatidylinositol transfer activity and is required for protein secretion through the Golgi complex in yeast. Recombinant PTPase MEG2 expressed in Escherichia coli possesses PTPase activity. PTPase MEG2 mRNA was detected in 12 cell lines tested, which suggests that this phosphatase is widely expressed. The structure of PTPase MEG2 implies that a tyrosine phosphatase could participate in the transfer of hydrophobic ligands or in functions of the Golgi apparatus.