Triggering of the T cell antigen receptor/CD3 (TcR/CD3) complex leads to rapid tyrosine phosphorylation of regulatory proteins that participate in initiating T cell activation and proliferation. This signal transduction event requires the presence of the TcR/CD3-associated protein tyrosine kinase p59fyn. There is also evidence that the CD45 phosphotyrosine phosphatase is involved in TcR/CD3 signalling. We show here by capping experiments using double indirect immunofluorescence techniques that the receptor phosphotyrosine phosphatase CD45 and the intracellular protein tyrosine kinase p59fyn specifically co-distribute in functional T lymphocytes. Furthermore, we provide evidence that isolated p59fyn is a substrate for CD45 as indicated by the rapid dephosphorylation of the regulatory Tyr531 of p59fyn by CD45. This dephosphorylation is accompanied by a severalfold increase in the catalytic activity of p59fyn as measured by its autophosphorylation and phosphorylation of an exogenous substrate. We also demonstrate that CD45-mediated dephosphorylation and activation of p59fyn apparently occurs at a slow basal rate in resting T cells. This represents the first identification of a physiologic regulator of p59fyn and implies a mechanism for the role of CD45 in TcR/CD3 signal transduction.