Abstract Protein tyrosine phosphatases (PTPs) comprise a superfamily of enzymes that control a diverse array of signal transduction pathways. However, the function and regulation of many of these enzymes remain undefined. Previous studies have shown that the optimal tyrosine phosphorylation response to various exogenous stimuli requires the production of reactive oxygen species (ROS). It has been proposed that ROS might transiently inactivate inhibitory PTPs, thus facilitating tyrosine phosphorylation-dependent signaling. Interestingly, the unique chemistry of the invariant, active site Cys residue located in the signature motif renders it highly susceptible to oxidation, leading to the inactivation of PTPs. We have developed a novel strategy to identify those PTPs that are oxidized and therefore, inactivated in response to extracellular stimuli. Iodoacetic acid (IAA) was used to alkylate selectively the thiolate anion of the active site Cys in the reduced PTPs. In contrast, any PTPs in which the active site Cys had been oxidized in response to the stimulus were resistant to alkylation. Following this key step to differentiate between the two pools of PTPs, the oxidized phosphatases were reduced back to the active state during the process of a standard in-gel PTP activity assay. This novel technique revealed, for the first time, that multiple cellular PTPs were indeed oxidized and inactivated in response to exogenous hydrogen peroxide. We have used this technique extensively to show that the ligand-stimulated production of intracellular hydrogen peroxide reversibly regulates the activity of specific PTPs in vivo. By defining the precise PTP targets of intracellular oxidants, the mechanistic details of signal transduction can be delineated. Due to the potential use of this method in finding the molecular targets of intracellular oxidants in diverse signaling pathways, we describe here the theoretical background and the detailed protocols of the modified in-gel PTP assay.