A phosphotyrosyl protein phosphatase (PTPase) activity has been characterized in the plasma membranes of confluent AR42J pancreatic tumor cells using 32P-labeled poly(Glu, Tyr) as substrate. Membrane PTPase activity exhibited an apparent Michaelis constant of 3 microM and an apparent maximal velocity of 0.9 nmol.min-1.mg-1. It was inhibited by orthovanadate, zinc, poly(Glu,Tyr) and was stimulated by EDTA and dithiothreitol. Gel filtration of solubilized plasma membranes gave a peak of enzyme activity at a relative molecular weight of 70,000. Plasma membrane PTPase activity was changed during AR42J cell growth. At the beginning of culture, the control PTPase activity was minimal. Over the 5 days of culture, PTPase activity increased to reach a maximum (3.5-fold over control activity) preceding confluency by 2 days. Then the high level of PTPase activity was sustained until confluency. Incubation of the cells with the stable somatostatin analogue SMS 201-995 (SMS) resulted in a rapid and transient activation of crude membrane PTPase activity. Activation reached a maximum level within 5 min of addition and return to control levels within 20 min. The effect of SMS was dose dependent with half-maximal and maximal activation occurring at 6 pM and 0.1 nM SMS respectively.