Signaling events leading to B cell growth or apoptosis are beginning to be unravelled, but detailed information is still lacking. To identify signaling molecules involved in B cell antigen receptor (BCR)-initiated pathways, we used the immature B cell line, WEHI-231, to investigate protein tyrosine phosphatases (PTP) whose expression was modulated by BCR ligation. Among the PTP cloned by reverse transcription-PCR, mRNA expression of the proline-, glutamic acid-, serine- and threonine-rich (PEST) domain phosphatase (PEP) was selectively elevated 3.1-fold within 3 h after anti-IgM antibody stimulation. In contrast, expression of another PEST domain phosphatase, PTP-PEST, was unaffected. Western blot analysis revealed that 71% of PEP was located in the cytosolic fraction, while 29% was in the membrane fraction. To examine the direct contribution made by PEP to BCR-initiated signal transduction, we transfected an antisense PEP cDNA into WEHI-231 cells. Two stable clones were established in which PEP expression was reduced by 34% and 47%, respectively. Strikingly, BCR-mediated inhibition of DNA synthesis was significantly rescued in the clones, and G1 phase cell cycle arrest and apoptosis were almost completely ablated. Considered collectively, these results indicate that PEP is a positive, crucial regulator in determining B cell fate triggered by BCR engagement.