Protein tyrosine phosphatase (PTP) 1B has long been known to regulate cell proliferation negatively, but the mechanism by which this inhibition occurs is poorly defined. We have shown previously that PTP1B binds to, and dephosphorylates, p130(Cas) (Crk-associated substrate) [1], a protein that is thought to play a role in integrin signaling [2,3]. In this report, we present evidence that PTP1B interferes specifically with cell-adhesion-stimulated, but not growth-factor-stimulated, signaling pathways. In rat fibroblasts that overexpress PTP1B, the activation of mitogen-activated protein (MAP) kinase by growth factors was not affected, but activation by cell adhesion was markedly impaired. The inhibition of adhesion-dependent MAP kinase activation by PTP1B required an intact proline-rich region in the carboxyl terminus of PTP1B, a region we have shown to mediate binding to the Src-homology 3 (SH3) domain of p130Cas [1]. Overexpression of wild-type PTP1B, but not of a proline-to-alanine mutant form (PA-PTP1B) that is unable to bind or dephosphorylate p130Cas, interfered with cell spreading, cytoskeletal architecture, and the formation of focal adhesion complexes. Cells overexpressing wild-type PTP1B also displayed markedly reduced migration in response to a fibronectin gradient, whereas cells expressing the PA-PTP1B mutant migrated normally. These data indicate that PTP1B exerts its inhibitory effects via proline-dependent interactions with one or more critical components of the adhesion-dependent signaling apparatus, and suggest that one of these components may be p130Cas.