The abnormal regulation of insulin signalling in insulin-resistant subjects is associated with inadequate suppression of soluble protein tyrosine phosphatase (PTPase) activity in skeletal muscle. Multiple PTPases are likely to be involved in the signalling cascade. SH2-Domain PTPases are a class of PTPases selected as candidates for regulating tyrosine phosphorylation following insulin stimulation since it has been reported that such PTPases associate with several receptors and the post- receptor target, IRS1. SH2-Domain PTPase expression was detected in FAO cells, a rat insulin-sensitive hepatoma cell line, and in C2C12 cells, a mouse muscle cell line, using RT-PCR and degenerate primers. Sequence analysis of the amplified products revealed a high degree of identity with the hematopoietic SH2-Domain PTPase, PTP1C. We observed evidence of alternative splicing of the PTP1C pre -mRNA in human rhabdomyosarcoma cells and in SBV- transformed lymphocytes. A related PTPase PTP1D, (SH- PTP2, SYP) has been recently found to be expressed in adult liver and skeletal muscle. PTP1D pre-mRNA is alternatively spliced in a region corresponding to the catalytic domain of the PTPase. Relative amounts of the two PTP1D isotypes was not different in insulin resistant and sensitive subjects.