We have cloned from cultured vascular smooth muscle cells a protein tyrosine phosphatase, rat density-enhanced phosphatase-1 (rDEP-1), which is a probable rat homologue of DEP-1/HPTP eta. rDEP-1 is encoded by an 8.7-kb transcript and is expressed as a 180- to 220-kD protein. The rDEP-1 gene is located on human chromosome 11 (region p11.2) and on mouse chromosome 2 (region 2E). The cDNA sequence predicts a transmembrane protein consisting of a single phosphatase catalytic domain in the intracellular region, a single transmembrane domain, and eight fibronectin type III repeats in the extracellular region (GenBank accession number U40790). In situ hybridization analysis demonstrates that rDEP-1 is widely expressed in vivo but that expression is highest in cells that form epithelioid monolayers. In cultured cells with epitheliod morphology, including endothelial cells and newborn smooth muscle cells, but not in fibroblast-like cells, rDEP-1 transcript levels are dramatically upregulated as population density increases. In vivo, quiescent endothelial cells in normal arteries express relatively high levels of rDEP-1. During repair of vascular injury, expression of rDEP-1 is downregulated in migrating and proliferating endothelial cells. In vivo, rDEP-1 transcript levels are present in very high levels in megakaryocytes, and circulating plates have high levels of the rDEP-1 protein. In vitro, initiation of differentiation of the human megakaryoblastic cell line CHRF-288-11 with phorbol 12-myristate 13-acetate leads to a very strong upregulation of rDEP-1 transcripts. The deduced structure and the regulation of expression of rDEP-1 suggest that it may play a role in adhesion and/or signaling events involving cell-cell and cell-matrix contact.