The proline-, glutamic acid-, serine- and threonine-rich (PEST) family of protein tyrosine phosphatases (PTPs) includes proline-enriched phosphatase (PEP)/lymphoid tyrosine phosphatase (LYP), PTP-PEST, and PTP-hematopoietic stem cell fraction (HSCF). PEP/LYP is a potent inhibitor of T-cell activation, principally by suppressing the activity of Src family protein tyrosine kinases (PTKs). This function seems to be dependent, at least in part, on the ability of PEP to bind C-terminal Src kinase (Csk), a PTK also involved in inactivating Src kinases. Interestingly, a polymorphism of LYP in humans (R620W) is a significant risk factor for autoimmune diseases including type 1 diabetes, rheumatoid arthritis, and lupus. The R620W mutation may be a 'gain-of-function' mutation. In non-hematopoietic cells, PTP-PEST is a critical regulator of adhesion and migration. This effect correlates with the aptitude of PTP-PEST to dephosphorylate cytoskeletal proteins such as Cas, focal adhesion associated-kinase (FAK), Pyk2, and PSTPIP. While not established, a similar function may also exist in immune cells. Additionally, overexpression studies provided an indication that PTP-PEST may be a negative regulator of lymphocyte activation. Interestingly, mutations in a PTP-PEST- and PTP-HSCF-interacting protein, PSTPIP1, were identified in humans with pyogenic sterile arthritis, pyoderma gangrenosum, and acne (PAPA) syndrome and familial recurrent arthritis, two autoinflammatory diseases. These mutations abrogate the ability of PSTPIP1 to bind PTP-PEST and PTP-HSCF, suggesting that these two PTPs may be negative regulators of inflammation.