PTP-1B is a major nontransmembrane phosphotyrosine phosphatase in human cell lines and tissues, but its physiological function(s) and mechanism(s) of regulation are largely unknown. We have found that in human diploid fibroblasts a novel PTP-1B mRNA isoform is produced upon stimulation of quiescent cells with a variety of growth factors. Generation of this isoform requires protein synthesis, suggesting that the product(s) of an immediate early response gene(s) is required. RNase protection and reverse transcription polymerase chain reaction analysis demonstrate that the isoform arises as a consequence of alternative pre-mRNA splicing, leading to retention of the last intron. The novel isoform is found on polyribosomes, indicating that it is actively translated, and is variably expressed in human tissues. Sequence analysis indicates that the isoform encodes a PTP-1B protein with an altered C terminus. To our knowledge, this is the first example of growth factor-regulated alternative splicing.