The interaction of the non-receptor tyrosine kinase, Src, with the cytoskeleton of adhesion sites was studied in nerve growth cones isolated from fetal rat brain. Of particular interest was the role of protein tyrosine phosphatases in the regulation of Src-cytoskeleton binding. Growth cones were found to contain a high level of protein tryrosine phosphatase activity, most of it membrane-associated and forming large, multimeric and wheat germ agglutinin-binding complexes. The receptor tyrosine phosphatase PTPalpha seems to be the most prevalent species among the membrane-associated enzymes. As seen by immunofluorescence, PTPalpha is present throughout the plasmalemma of the growth cone including filopodia, and it forms a punctate pattern consistent with that of integrin beta1. For adhesion site analysis, isolated growth cones were either plated onto the neurite growth substratum, laminin, or kept in suspension. Plating growth cones on laminin triggered an 8-fold increase in Src binding to the adherent cytoskeleton. This effect was blocked completely with the protein tyrosine phosphatase inhibitor, vanadate. Growth cone plating also increased the association with adhesion sites of tyrosine phosphatase activity (14-fold) and of PTPalpha immunoreactivity (6-fold). Vanadate blocked the enzyme activity but not the recruitment of PTPalpha to the adhesion sites. In conjunction with our previous results on growth cones, these data suggest that integrin binding to laminin triggers the recruitment of PTPalpha (and perhaps other protein tyrosine phosphatases) to adhesion sites, resulting in de-phosphorylation of Src's tyr 527. As a result Src unfolds, becomes kinase-active, and its SH2 domain can bind to an adhesion site protein. This implies a critical role for protein tyrosine phosphatase activity in the earliest phases of adhesion site assembly.