Oxidation is emerging as an important regulatory mechanism of protein-tyrosine phosphatases (PTPs). Here we report that PTPs are differentially oxidized, and we provide evidence for the underlying mechanism. The membrane-proximal RPTPalpha-D1 was catalytically active but not readily oxidized as assessed by immunoprobing with an antibody that recognized oxidized catalytic site cysteines in PTPs (oxPTPs). In contrast, the membrane-distal RPTPalpha-D2, a poor PTP, was readily oxidized. Oxidized catalytic site cysteines in PTP immunoprobing and mass spectrometry demonstrated that mutation of two residues in the Tyr(P) loop and the WPD loop that reverse catalytic activity of RPTPalpha-D1 and RPTPalpha-D2 also reversed oxidizability, suggesting that oxidizability and catalytic activity are coupled. However, catalytically active PTP1B and LAR-D1 were readily oxidized. Oxidizability was strongly dependent on pH, indicating that the microenvironment of the catalytic cysteine has an important role. Crystal structures of PTP domains demonstrated that the orientation of the absolutely conserved PTP loop arginine correlates with oxidizability of PTPs, and consistently, RPTPmu-D1, with a similar conformation as RPTPalpha-D1, was not readily oxidized. In conclusion, PTPs are differentially oxidized at physiological pH and H(2)O(2) concentrations, and the PTP loop arginine is an important determinant for susceptibility to oxidation.