In higher eukaryotic organisms, the regulation of tyrosine phosphorylation is known to play a major role in the control of cell division. Recently, a wide variety of protein tyrosine phosphatase (PTPase)-encoding genes (PTPs) have been identified to accompany the many tyrosine kinases previously studied. However, in the yeasts, where the cell cycle has been most extensively studied, identification of the genes involved in the direct regulation of tyrosine phosphorylation has been difficult. We have identified a pair of genes in the yeast Saccharomyces cerevisiae, which we call PTP1 and PTP2, whose products are highly homologous to PTPases identified in other systems. Both genes are poorly expressed, and contain sequence elements consistent with low-abundance proteins. We have carried out an extensive genetic analysis of PTP1 and PTP2, and found that they are not essential either singly or in combination. Neither deletion nor overexpression results in any strong phenotypes in a number of assays. Deletions also do not affect the mitotic blockage caused by deletion of the MIH1 gene (encoding a positive regulator of mitosis) and induction of the heterologous Schizosaccharomyces pombe wee1+ gene (encoding a negative regulator of mitosis). Molecular analysis has shown that PTP1 and PTP2 are quite different structurally and are not especially well conserved at the amino acid sequence level. Low-stringency Southern blots indicate that yeast may contain a family of PTPase-encoding genes. These results suggest that yeast may contain other PTPase-encoding genes that overlap functionally with PTP1 and PTP2.