Angiotensin II (Ang II) type 2 receptor (AT2) mediated inhibition of cell proliferation and activation of protein tyrosine phosphatase (PTP) were investigated in R3T3 fibroblast cells selectively expressing the AT2 subtype. Ang II did not alter the cell number of serum depleted R3T3 cells but inhibited basic fibroblast growth factor (bFGF)-stimulated cell proliferation in a dose dependent manner (IC50; 1-5 nM). This inhibitory response was abolished by an concomitant incubation with an AT2 antagonist, PD123319, and was mimicked by an AT2 agonist, CGP42112A. Stimulation of Ang II resulted in a rapid and transient increase in PTP activity as determined by using para-nitrophenyl phosphate (p-Npp) as a substrate in serum depleted R3T3 cells. This PTP activation was mimicked by CGP42112A. We conclude that the AT2 receptor is involved in the inhibition of cell proliferation and activation of protein tyrosine phosphatase.