Here we describe a novel member of the receptor-like protein-tyrosine phosphatases (PTPs) termed PTP lambda, which is homologous to the homotypically adherent PTPs kappa and mu. Murine PTP lambda contains MAM, IgG, fibronectin type III, and dual phosphatase domains. As has been demonstrated for PTPs kappa and mu, PTP lambda mediates homotypic adhesion in vitro, and PTP lambda is associated with beta catenin in kidney epithelial cells. The extracellular domain of PTP lambda is proteolytically processed in cell culture as well as in vivo. Northern blot analysis reveals that PTP lambda is expressed throughout embryonic development and is predominately found in adult brain, lung, and kidney. In situ hybridization to 15.5-day old rat embryos reveals that PTP lambda is expressed in a variety of embryonic neuronal sites as well as in the esophagus, lung bronchiolar epithelium, kidney glomerular epithelium, olfactory epithelium, and various cartilagenous sites. Analysis of neonatal brain demonstrates expression in cells of the hippocampus, cortex, and the substantia nigra. Finally, immunohistochemical analysis reveals expression of this PTP on specific neurons of the spinal cord as well as on isolated cortical neurons.