The Schizosaccharomyces pombe genes pyp1+ and pyp2+ encode protein tyrosine phosphatases (PTPases) that act as negative regulators of mitosis upstream of the wee1+/mik1+ pathway. Here we provide evidence that pyp1+ and pyp2+ function independently of cdr1+(nim1+) in the inhibition of mitosis and that the wee1 kinase is not a direct substrate of either PTPase. In a pyp1::ura4 cdc25-22 genetic background, overexpression of either the N-terminal domain of pyp1+ or a catalytically inactive mutant, pyp1C470S, causes cell cycle arrest. This phenotype reverses the suppression of a cdc25 temperature-sensitive mutation at 35 degrees C caused by a pyp1 disruption. Furthermore, pyp1C470S and a catalytically inactive mutant of pyp2, pyp2C630S, induce mitotic delay as do their wild-type counterparts. Analysis of pyp1+ and pyp2+ further reveals that in vitro PTPase activity of pyp1 and pyp2, as well as their biological activity, is dependent on the presence of N-terminal sequences that are not normally considered part of PTPase catalytic domains.