Protein kinases and phosphatases regulate the activity of extracellular signal-regulated kinases 1 and 2 (ERK1/2) by controlling the phosphorylation of specific residues. We report the physical and functional association of ERK1/2 with the PTP-SL and STEP protein tyrosine phosphatases (PTPs). Upon binding, the N-terminal domains of PTP-SL and STEP were phosphorylated by ERK1/2, whereas these PTPs dephosphorylated the regulatory phosphotyrosine residues of ERK1/2 and inactivated them. A sequence of 16 amino acids in PTP-SL was identified as being critical for ERK1/2 binding and termed kinase interaction motif (KIM) (residues 224-239); it was shown to be required for phosphorylation of PTP-SL by ERK1/2 at Thr253. Co-expression of ERK2 with catalytically active PTP-SL in COS-7 cells impaired the EGF-induced activation of ERK2, whereas a PTP-SL mutant, lacking PTP activity, increased the ERK2 response to EGF. This effect was dependent on the presence of the KIM on PTP-SL. Furthermore, ERK1/2 activity was downregulated in 3T3 cells stably expressing PTP-SL. Our findings demonstrate the existence of a conserved ERK1/2 interaction motif within the cytosolic non-catalytic domains of PTP-SL and STEP, which is required for the regulation of ERK1/2 activity and for phosphorylation of the PTPs by these kinases. Our findings suggest that PTP-SL and STEP act as physiological regulators of the ERK1/2 signaling pathway.