Dual specificity protein tyrosine phosphatases (dsPTPs) are a subfamily of protein tyrosine phosphatases implicated in the regulation of mitogen- activated protein kinase (MAPK). In addition to hydrolyzing phosphotyrosine, dsPTPs can hydrolyze phosphoserine/threonine-containing substrates and have been shown to dephosphorylate activated MAPK. We have identified a novel dsPTP, rVH6, from rat hippocampus. rVH6 contains the conserved dsPTP active site sequence, VXVHCX2GX2RSX5AY(L/I)M, and exhibits phosphatase activity against activated MAPK. In PC12 cells, rVH6 mRNA is induced during nerve growth factor-mediated differentiation but not during insulin or epidermal growth factor mitogenic stimulation. In MM14 muscle cells, rVH6 mRNA is highly expressed in proliferating cells and declines rapidly during differentiation. rVH6 expression correlates with the inability of fibroblast growth factor to stimulate MAPK activity in proliferating but not in differentiating MM14 cells. rVH6 protein localizes to the cytoplasm and is the first dsPTP to be localized outside the nucleus. This novel subcellular localization may expose rVH6 to potential substrates that differ from nuclear dsPTPs substrates.