We study the influence of tyrosine phosphorylation on PTP-PEST, a cytosolic protein tyrosine phosphatase. Utilizing a combination of experimental data and computational modeling, specific tyrosine sites, notably, Y64 and Y88, are identified for potential phosphorylation. Phosphorylation at these sites affects loop dynamics near the catalytic site, altering interactions among key residues and modifying the size of the binding pocket. This, in turn, impacts substrate binding, as indicated by changes in the binding energy. Our findings provide insights into the structural and functional consequences of tyrosine phosphorylation on PTP-PEST, enhancing our understanding of its effects on substrate binding and catalytic conformation.