Receptor Protein-Tyrosine Phosphatase alpha (RPTP alpha) is a transmembrane protein with two cytoplasmic catalytic protein-tyrosine phosphatase (PTP) domains and a relatively short (123 amino acids) extracellular domain. Here we report that treatment of transfected cells that express RPTP alpha with the phorbol ester 12-O-tetradecanoyl-phorbol-13-acetate, a direct activator of protein kinase C, induced a rapid, transient increase in RPTP alpha activity due to a 2- to 3-fold increase in substrate affinity. A transient increase in RPTP alpha serine phosphorylation was concomitant with the enhanced activity. Tryptic phosphopeptide mapping of RPTP alpha demonstrated that phosphorylation of three tryptic peptides was enhanced in response to phorbol ester. In vitro dephosphorylation of RPTP alpha from phorbol ester-treated cells reduced RPTP alpha activity to prestimulation levels, indicating that enhanced serine phosphorylation directly accounted for the increase in activity. Our results demonstrate that serine phosphorylation may play a key role in the regulation of the activity of transmembrane PTPs.