The extracellular segment of the receptor-type type protein tyrosine phosphatase PTPmu, possesses an MAM domain, an immunoglobulin domain, and four fibronectin type-III repeats. It binds homophilically, i.e., PTPmu on the surface of one cell binds to PTPmu on an apposing cell, and the binding site lies within the immunoglobulin domain. The intracellular segment of PTPmu has two PTP domains and a juxtamembrane segment that is homologous to the conserved intracellular domain of the cadherins. In cadherins, this segment interacts with proteins termed catenins to mediate association with the actin cytoskeleton. In this article, we demonstrate that PTPmu associates with a complex containing cadherins, alpha- and beta-catenin in mink lung (MvLu) cells, and in rat heart, lung, and brain tissues. Greater than 80% of the cadherin in the cell is cleared from Triton X-100 lysates of MvLu cells after immunoprecipitation with antibodies to PTPmu; however, the complex is dissociated when lysates are prepared in more stringent, SDS-containing RIPA buffer. In vitro binding studies demonstrated that the intracellular segment of PTPmu binds directly to the intracellular domain of E-cadherin, but not to alpha- or beta-catenin. Consistent with their ability to interact in vivo, PTPmu, cadherins, and catenins all localized to points of cell-cell contact in MvLu cells, as assessed by immunocytochemical staining. After pervanadate treatment of MvLu cells, which inhibits cellular tyrosine phosphatase activity including PTPmu, the cadherins associated with PTPmu are now found in a tyrosine- phosphorylated form, indicating that the cadherins may be an endogenous substrate for PTPmu. These data suggest that PTPmu may be one of the enzymes that regulates the dynamic tyrosine phosphorylation, and thus function, of the cadherin/catenin complex in vivo.