The extracellular domains of receptor-type protein-tyrosine phosphatases (PTPs) contain a diverse range of protein modules like fibronectin- or immunoglobulin-like structures. These are frequently expressed in a tissue- and development specific manner as splice variants. The extracellular domain of PTPα is rather short and heavily glycosylated. Two splice variants are known, which it differs by an exon encoding nine amino acids within the extracellular domain. We have analyzed the expression pattern of both variants and found that the smaller form is ubiquitously expressed while the larger form was found at an increased level only in brain, some skeletal muscle and differentiating cells like granule neurons, adipocytes and myotubes. The phosphatase activity of both forms was similar when tested in vitro using para-nitrophenylphosphate as a substrate and in a transient expression system with the substrates c-Fyn or c-Src. In a quantitative focus formation assay the capability of the larger form to activate Src-dependent focus formation in intact cells was increased more than twofold whereas the capability to dephosphorylate the insulin receptor in a BHK cell system was similar. We conclude that the two splice variants of PTPα are expressed differentially and regulate c-Src activity in different ways.