Fibroblast growth factor receptor (class IV) shares a certain degree of similarity with class III members like platelet-derived growth factor and macrophage-colony-stimulating factor receptors, which, once activated, are substrates of low M r phosphotyrosine protein phosphatase. Up until now no phosphotyrosine phosphatase has been shown to act on this receptor in vivo. Here we demonstrate that low M r phosphotyrosine protein phosphatase is able to reduce receptor tyrosine phosphorylation and cell proliferation in response to basic fibroblast growth factor. Contrary to what was previously observed for platelet-derived growth factor, during cell stimulation with basic fibroblast growth factor, no enzyme redistribution among cellular compartments is observed.