Apoptosis, or programmed cell death, occurs during development and may also be an important factor in many diseases. However, little is known about the signal transduction pathways regulating apoptosis. In these studies, loss of endothelial cell-substrate attachment and apoptosis after removal of growth factors was associated with dephosphorylation of tyrosine residues at the cell periphery. Dephosphorylation of total cellular proteins accompanied apoptosis and was reduced by orthovanadate, an inhibitor of protein tyrosine phosphatases. Orthovanadate blocked the fragmentation of nuclear DNA, inhibited DNA laddering, and suppressed the expression of TRPM-2, an apoptosis-associated gene. The tyrosine phosphorylation levels of FAK125, erk1 (mitogen-activated kinase kinase), and cdc-2 were reduced during apoptosis. FAK125 dephosphorylation was inhibited by orthovanadate, but premature activation (tyrosine dephosphorylation) of cdc-2 was not. Orthovanadate was as effective as basic fibroblast growth factor in activating erk1 without increasing cell proliferation and in preventing the apoptosis of endothelial cells after treatment with tumor necrosis factor alpha. Endothelial cell differentiation on extracellular matrix (Matrigel) was also stimulated by orthovanadate in the absence of basic fibroblast growth factor without affecting growth arrest and inhibition of DNA synthesis. Expression of the cyclin-dependent kinase inhibitor p21 (Waf1/Cip1/Sdi1) was down-regulated during the early stages of differentiation, remained low for at least 6 hours as differentiation proceeded, and increased upon completion of differentiation. Cells that failed to down-regulate p21 mRNA on Matrigel in the absence of angiogenic factors underwent apoptosis. These results suggest that protein tyrosine phosphatases are actively involved in signal transduction during apoptosis and may regulate p21 expression to inhibit endothelial cell differentiation.