The molecular mechanisms of signal transduction have been the focus of intense research during the last decade. In T cells, much of the work has centered on protein tyrosine kinase-mediated signaling from the TCR and cytokine receptors, while the study of protein tyrosine phosphatases has lagged behind. Nevertheless, it has now become clear that many protein tyrosine phosphatases play equally important roles in T cell physiology and that no kinase-regulated system would work without the counterbalancing participation of phosphatases. In fact, we have learned that many processes are regulated primarily on the phosphatase side. This minireview summarizes the current state-of-the art in our understanding of the regulation and biology of protein tyrosine phosphatases in T lymphocyte physiology.