The low molecular weight phosphotyrosine phosphatases (PTPases) constitute a distinctive class of phosphotyrosine phosphatases that is widely distributed among vertebrate and invertebrate organisms. In vertebrates, two isoenzymes of these low molecular weight PTPases are commonly expressed. The two human isoenzymes, HCPTPA and HCPTPB, differ in an alternatively spliced sequence (residues 40-73) referred to as the variable loop, resulting in isoenzymes that have different substrate specificities and inhibitor/activator responses. We present here the x-ray crystallographic structure of a human low molecular weight PTPase solved by molecular replacement to 2.2 A. The structure of human low molecular weight PTPase is compared with a structure representing the other isoenzyme in this PTPase class, in each case with a sulfonate inhibitor bound to the active site. Possible aromatic residue interactions with the phosphotyrosine substrate are proposed from an examination of the binding site of the inhibitors. Differences are observed in the variable loop region, which forms one wall and the floor of a long crevice leading from the active-site loop. A set of residues lying along this crevice (amino acids 49, 50, and 53) is suggested to be responsible for differences in substrate specificity in these two enzymes.