The protein tyrosine phosphatase PTP1, which mediates reversible phosphorylation on tyrosine, has been shown to play an important regulatory role during Dictyostelium development. Mutants lacking PTP1 develop more rapidly than normal, while strains that overexpress PTP1 display aberrant morphology. However, the signalling pathways involved have not been characterised. In reexamining these strains, we have found that there is an inverse correlation between levels of PTP1 activity, the extent of tyrosine phosphorylation on Dictyostelium STATa after treatment with cAMP, and the proportion of the slug population exhibiting STATa nuclear enrichment in vivo. This suggests that PTP1 acts to attenuate the tyrosine phosphorylation of STATa and downstream STATa-mediated pathways. Consistent with this, we show that when PTP1 is overexpressed, there is increased expression of a prestalk cell marker at the slug posterior, a phenocopy of STATa null slugs. In ptp1 null strains, STATa tyrosine phosphorylation and nuclear enrichment in the slug anterior is increased. There is also a change in the prestalk to prespore cell ratio. Synergy experiments suggest that this is due to a cell-autonomous defect in forming the subset of prespore cells that are located in the anterior prespore region.