Epidermal growth factor receptor (EGFR), the prototypic receptor protein tyrosine kinase, is a major regulator of growth and survival for many epithelial cell types. We report here that receptor-type protein-tyrosine phosphatase-kappa (RPTP-kappa) dephosphorylates EGFR and thereby regulates its function in human keratinocytes. Protein-tyrosine phosphatase (PTP) inhibitors induced EGFR tyrosine phosphorylation in intact primary human keratinocytes and cell-free membrane preparations. Five highly expressed RPTPs (RPTP-beta, delta, kappa, mu, and xi) were functionally analyzed in a Chinese hamster ovary (CHO) cell-based expression system. Full-length human EGFR expressed in CHO cells, which lack endogenous EGFR, displayed high basal (i.e. in the absence of ligand) tyrosine phosphorylation. Co-expression of RPTP-kappa, but not other RPTPs, specifically reduced basal EGFR tyrosine phosphorylation. RPTP-kappa also reduced epidermal growth factor-dependent EGFR tyrosine phosphorylation in CHO cells. Purified RPTP-kappa preferentially dephosphorylated EGFR tyrosines 1068 and 1173 in vitro. Overexpression of wild-type or catalytically inactive RPTP-kappa reduced or enhanced, respectively, basal and EGF-induced EGFR tyrosine phosphorylation in human keratinocytes. Furthermore, siRNA-mediated knockdown of RPTP-kappa increased basal and EGF-stimulated EGFR tyrosine phosphorylation and augmented downstream Erk activation in human keratinocytes. RPTP-kappa levels increased in keratinocytes as cells reached confluency, and overexpression of RPTP-kappa in subconfluent keratinocytes reduced keratinocyte proliferation. Taken together, the above data indicate that RPTP-kappa is a key regulator of EGFR tyrosine phosphorylation and function in human keratinocytes.