Oxidative stress-induced tyrosine phosphorylation has been ascribed to activation of phosphotyrosine kinase or to inhibition of phosphotyrosine phosphatase (PTP). We have previously identified a PTP associated with band 3 in the human erythrocyte membrane, a PTP that is normally highly active and prevents the appearance of band 3 phosphotyrosine. Here we show that treatment of erythrocytes with the thiol-oxidizing agent diamide leads to the formation of PTP disulfides (PTP-band 3 mixed disulfides) and inhibition of dephosphorylation, allowing the accumulation of band 3 phosphotyrosine. Upon reduction of the disulfides, the band 3 phosphotyrosine is dephosphorylated. Erythrocyte thiol alkylation by N-ethylmaleimide results in irreversible PTP inhibition and irreversible phosphorylation. The results are consistent with the notion that alterations in cellular thiol status affect the cell phosphotyrosine status and that oxidative stress-induced tyrosine phosphorylation involves inhibition of PTP.