The present invention relates to a novel polypeptide, PTP20, and to nucleic acid molecules encoding the polypeptide. The invention also relates to nucleic acid molecules encoding portions of the phosphatase, nucleic acid vectors containing PTP20 related nucleic acid molecules, recombinant cells containing such nucleic acid vectors, polypeptides purified from such recombinant cells, antibodies to such polypeptides, and methods of identifying compounds that bind PTP20 or abrogate its interactions with natural binding partners. Also disclosed are methods for diagnosing abnormal conditions in an organism with PTP20 related molecules or compounds.