Action of protein kinases and phosphatases contributes to myocardial hypertrophy. PRL-3, a protein tyrosine phosphatase, was identified in a cDNA library from an explanted human heart obtained from a patient with idiopathic cardiomyopathy. PRL-3 is expressed in heart and skeletal muscle, exhibiting approximately 76% identity to the ubiquitous tyrosine phosphatase PRL-1, which was reported to increase cell proliferation. PRL-3 was cloned into E. coli and purified using affinity chromatography. PRL-3 activity was determined using the substrate 6,8-difluoro-4-methylumbelliferyl phosphate, and was inhibited by vanadate and analogs. HEK293 cells expressing PRL-3 demonstrated increased growth rates versus nontransfected cells or cells transfected with the catalytically inactive C104S PRL-3 mutant. The tyrosine phosphatase inhibitor, potassium bisperoxo (bipyridine) oxovanadate V, normalizes the growth rate of PRL-3 expressing cells to that of parental HEK293 cells in a concentration-dependent manner. Using FLIPR analysis, parental HEK293 cells mobilize calcium when stimulated with angiotensin-II (AngII). However, calcium mobilization is inhibited in cells expressing wild-type PRL-3 when stimulated with AngII, while cells expressing the inactive mutant of PRL-3 mobilize calcium to the same extent as parental HEK293 cells. Western blots comparing PRL-3 transfected cells to parental HEK293 cells showed dephosphorylation of p130^cas in response to AngII. These data suggest a role for PRL-3 in the modulation of intracellular calcium transients induced by AngII.