Reactive microglia have been suggested to play a role in the Alzheimer's disease (AD) process, and previous studies have shown that expression of CD45, a membrane-bound protein-tyrosine phosphatase (PTP), is elevated in microglia in AD brain compared with controls. To investigate the possible role of CD45 in microglial responsiveness to beta-amyloid (Abeta) peptides, we first co-treated primary cultured microglia with a tyrosine phosphatase inhibitor [potassium bisperoxo (1,10-phenanthroline) oxovanadate (phen), 5 micrometer] and freshly solubilized Abeta peptides (1000 nm). Data show synergistic induction of microglial activation as evidenced by tumor necrosis factor alpha (TNF-alpha) production and nitric oxide (NO) release, both of which we show to be dependent on activation of p44/42 mitogen-activated protein kinase (MAPK). Furthermore, co-treatment with phen and Abeta peptides results in microglia-induced neuronal cell injury. Stimulation of microglial CD45 by anti-CD45 antibody markedly inhibits these effects via inhibition of p44/42 MAPK, suggesting that CD45 is a negative regulator of microglial activation. Accordingly, primary cultured microglia from CD45-deficient mice demonstrate hyper-responsiveness to Abeta, as evidenced by TNF-alpha release, NO production, and neuronal injury after stimulation with Abeta peptides. As a validation of these findings in vivo, brains from a transgenic mouse model of AD [transgenic Swedish APP-overexpressing (Tg APP(sw)) mice] deficient for CD45 demonstrate markedly increased production of TNF-alpha compared with Tg APP(sw) mice. Taken together, these results suggest that therapeutic agents that stimulate the CD45 PTP signaling pathway may be effective in suppressing microglial activation associated with AD.