The molecular mechanisms of signal transduction have been at the focus of intense scientific research world-wide. As a result, our understanding of protein tyrosine kinase-mediated signaling has advanced at an unprecedented pace during the past decade. In contrast, the study of protein tyrosine phosphatases is in its infancy, but is currently gathering momentum and is predicted to become a "hot topic" in the field within the next few years. This review summarizes the current state-of-the art in our understanding of the structure, regulation and role of protein tyrosine phosphatases in lymphocyte activation.