Neurotrophin receptors of the Trk family play a vital role in the survival of developing neurons and the process of axonogenesis. The Trk family are receptor protein tyrosine kinases (RTKs) and their signalling in response to neurotrophins is critically dependent upon their ability to transphosphorylate and act as signalling centres for multiple adaptor proteins and distinct, downstream pathways. Such phosphotyrosine signalling also depends upon the appropriate counter-regulation by phosphatases. A large family of receptor-like protein tyrosine phosphatases (RPTPs) are also expressed in developing neurons and in this study we have examined the ability of the phosphatase PTPsigma to interact with and regulate Trk proteins in transfected HEK 293T cells. PTPsigma can bind differentially to Trk proteins, binding stably in complexes with TrkA and TrkC, but not TrkB. The transmembrane domains of PTPsigma and TrkA appear to be sufficient for the direct or indirect interaction between these two receptors. Furthermore, PTPsigma is shown to dephosphorylate all three Trk receptors and suppress their phosphorylation in the presence of neurotrophins. In addition, overexpression of PTPsigma in primary sensory neurons in culture inhibits neurite outgrowth without affecting the short-term survival of these neurons. PTPsigma can thus show differential complex formation with different Trk family members and in neurons can selectively target the neurite-forming signalling pathway driven by TrkA.