A synthetic tris-sulfotyrosyl dodecapeptide [TRDIY[S]ETDY[S]Y[S]RK- amide], whose primary sequence is identical to the 1142-1153 sequence of the insulin proreceptor, inhibited insulin receptor dephosphorylation in solubilized membranes, and digitonin-permeabilized cells derived from Chinese hamster ovary [CHO] cells expressing high levels of human insulin receptors [CHO/HIRc]. It also inhibited the dephosphorylation of a synthetic tyrosine phosphorylated substrate by recombinant PTP-1B, a protein tyrosine phosphatase (PTPase), indicating that it acted via interaction with PTPase(s). A N-stearyl derivative of the peptide caused an ~4.5-fold increase in insulin-stimulated receptor autophosphorylation in intact CHO/HIRc cells. The peptide displayed specificity toward tyrosine- class phosphatases only, as it had no effect on the activities of the serine/threonine phosphatases PP-1 and PP-2A, or alkaline phosphatase. The tyrosine sulfate ester bonds of the peptide were stable when incubated with PTP-1B (1h, 300 C). These data suggest that the sulfotyrosyl peptide functions as a nonhydrolyzable phosphotyrosyl peptide analogue capable of direct interaction with PTPase catalytic domain.