The receptor protein tyrosine phosphatase density-enhanced phosphatase-1 (DEP-1) has been implicated in aberrant cancer cell growth and immune cell function, however, its function within cells has yet to be properly elucidated. To investigate the cellular function of DEP-1, stable cell lines inducibly expressing DEP-1 were generated. Induction of DEP-1 expression was found to decrease PDGF-stimulated tyrosine phosphorylation of a number of cellular proteins including the PDGF receptor, and to inhibit growth factor-stimulated phosphorylation of components of the MAPK pathway, indicating that DEP-1 antagonised PDGF receptor signalling. This was supported by data showing that DEP-1 expression resulted in a reduction in cell proliferation. DEP-1-expressing cells had fewer actin-containing microfilament bundles, reduced vinculin and paxillin-containing adhesion plaques, and were defective in interactions with fibronectin. Defective cell-substratum adhesion correlated with lack of activation of FAK in DEP-1-expressing cells. Time-lapse interference reflection microscopy of live cells revealed that although small focal contacts at the leading edge were generated in DEP-1-expressing cells, they failed to mature into stable focal adhesions, as found in control cells. Further motility analysis revealed that DEP-1-expressing cells retained limited random motility, but showed no chemotaxis towards a gradient of PDGF. In addition, cell-cell contacts were disrupted, with a change in the localisation of cadherin from discrete areas of cell-cell contact to large areas of membrane interaction, and there was a parallel redistribution of beta-catenin. These results demonstrate that DEP-1 is a negative regulator of cell proliferation, cell-substratum contacts, motility and chemotaxis in fibroblasts.