We previously cloned a cDNA encoding a protein tyrosine phosphatase (PTP) containing sequence homology to protein 4.1, designated PTPMEG. Recombinant protein and amino- and carboxyl-terminal peptides were used to obtain polyclonal antibodies against PTPMEG to identify endogenous PTPMEG in A172 cells and to show that the enzyme is primarily localized to the membrane and cytoskeletal fractions of these cells. We prepared recombinant protein in Sf9 and COS-7 cells to further characterize it. The protein was phosphorylated in both cell types on serine and threonine residues. The multiple sites of phosphorylation were all within the intermediate domain of the protein between amino acids 386 and 503. This region also contains two PEST sequences and two proline-rich motifs that may confer binding to Src homology 3 domains. The recombinant protein was cleaved by trypsin and calpain in this region and thereby activated 4-8-fold as assayed using Raytide as substrate. We immunoprecipitated the protein from human platelets with both amino- and carboxyl-terminal antipeptide antibodies to assess the state of the enzyme in these cells. The full-length molecule was found in extracts from unstimulated platelets, whereas extracts from both calcium ionophore- and thrombin-treated platelets contained proteolyzed and activated forms of the enzyme, indicating that proteolysis by calpain is evoked in response to thrombin. Prior incubation of platelets with calpeptin, an inhibitor of calpain, blocked the agonist-induced proteolysis.