The last decade has seen an exponentially increasing interest in the molecular mechanisms of signal transduction. In T cells, much of the focus has been on protein tyrosine kinase (PTK)-mediated signaling from the T cell receptor (TCR) and cytokine receptors, while the study of protein tyrosine phosphatases (PTPases) has lagged behind. However, recent discoveries have revealed that several PTPases play important roles in many different aspects of T cell physiology. We predict that the phosphatases will become a 'hot topic' in the field within the next few years. This review summarizes the current understanding of the regulation and biology of PTPases in T lymphocyte activation.