Previous work by others has demonstrated that rat brain protein tyrosine phosphatase (rbPTP-1) exhibited increased reactivity toward substrates containing acidic residues N-terminal to phosphotyrosine. We show that substrates containing a single acidic residue C-terminal to the phosphotyrosine also enhanced reactivity with rbPTP-1. A substrate aspartate residue at the P+2 position exhibited the greatest enhancement of reactivity;Surface basic residues of rbPTP-1 were investigated for their role in the increased reactivity due to substrate acidic residues. Mutation of R47 or K120 to alanine decreased the enhancement of reactivity due to acidic residues N-terminal to phosphotyrosine by 78% and 73% respectively compared to WT. These mutants also demonstrated decreased PTP reactivity with substrates containing a C-terminal acidic residue by 69% and 52%, respectively. Mutation of both PTP residues almost completely abrogated the enhancement of reactivity due to substrate acidic residues, decreasing reactivity approximately 90%. Mutation of R24 or K36 to alanine had a smaller effect on the enhancement of reactivity due to substrate acidic residues, decreasing enhancement of reactivity 40% for R24A, and 48% for K36. In all cases, kinetic analysis showed that the changes in reactivity primarily affected the Km only. With substrates containing multiple acidic residues, WT and mutant PTP's both demonstrated additivity of the enhancement effect, but R47A and K120A mutants exhibited no difference in reactivity enhancement with substrates containing a single substrate acidic residue at position P-1 or P-5. These results suggest a general type of interaction between substrate acidic residues and PTP basic residues;To examine the effect of substrate acidic residues on substrate binding, a cysteine-to-serine mutant of rbPTP-1 was used. This mutation inactivated the enzyme, but preserved substrate binding ability. Peptide substrates demonstrated much higher affinity for PTP binding than para-nitrophenyl phosphate, a phosphotyrosine analog. Peptides containing single acidic residues at P-1, P-2, P-5, or P+2 all showed increased binding affinity for rbPTP-1 versus peptides without acidic residues. The effect of the number of substrate acidic residues on binding was additive. These results indicate that the reactivity enhancement of rbPTP-1 due to substrate acidic residues is a direct binding effect.