A nonradioactive assay for protein tyrosine phosphatases (PTPs), employing a tyrosine-phosphorylated peptide as a substrate, has been developed and applied to analyze purified enzymes, cell extracts, and immunoprecipitates. The reaction was followed by matrix-assisted laser desorption ionization time-of-flight mass spectrometry (MALDI-TOF MS) in a linear and positive ion mode with delayed extraction. MALDI-TOF MS detects a loss of peptide mass by 80 Da as a result of dephosphorylation and, more importantly, it yields phospho-peptide to dephosphorylated product peak intensity ratios proportional to their concentration ratios. A strong bias of the MALDI-TOF MS toward detection of the non-phospho-peptide allows accurate detection of small fractions of dephosphorylation. The method is highly sensitive and reproducible. It can be applied to general assays of protein phosphatases with various phospho-peptides as substrates.