Receptor tyrosine phosphatases (R-PTPases) feature PTPase domains in the context of a receptor-like transmembrane topology. The R-PTPase R-PTP-kappa displays an extracellular domain composed of fibronectin type III motifs, a single immunoglobulin domain, as well as a recently defined MAM domain (Y.-P. Jiang, H. Wang, P. D'Eustachio, J.M. Musacchio, J. Schlessinger, and J. Sap, Mol. Cell. Biol. 13:2942-2951, 1993). We report here that R-PTP-kappa can mediate homophilic intercellular interaction. Inducible expression of the R-PTP-kappa protein in heterologous cells results in formation of stable cellular aggregates strictly consisting of R-PTP-kappa-expressing cells. Moreover, the purified extracellular domain of R-PTP-kappa functions as a substrate for adhesion by cells expressing R-PTP-kappa and induces aggregation of coated synthetic beads. R-PTP-kappa-mediated intercellular adhesion does not require PTPase activity or posttranslational proteolytic cleavage of the R-PTP-kappa protein and is calcium independent. The results suggest that R-PTPases may provide a link between cell-cell contact and cellular signaling events involving tyrosine phosphorylation.