PTP1B modulates the association of beta-catenin with N-cadherin through binding to an adjacent and partially overlapping target site.

The nonreceptor tyrosine phosphatase PTP1B associates with the cytoplasmic domain of N-cadherin and may regulate cadherin function through dephosphorylation of beta-catenin. We have now identified the domain on N-cadherin to which PTP1B binds and characterized the effect of perturbing this domain on cadherin function. Deletion constructs lacking amino acids 872-891 fail to bind PTP1B. This domain partially overlaps with the beta-catenin binding domain. To further define the relationship of these two sites, we used peptides to compete in vitro binding. A peptide representing the most NH(2)-terminal 8 amino acids of the PTP1B binding site, the region of overlap with the beta-catenin target, effectively competes for binding of beta-catenin but is much less effective in competing PTP1B, whereas two peptides representing the remaining 12 amino acids have no effect on beta-catenin binding but effectively compete for PTP1B binding. Introduction into embryonic chick retina cells of a cell-permeable peptide mimicking the 8 most COOH-terminal amino acids in the PTP1B target domain, the region most distant from the beta-catenin target site, prevents binding of PTP1B, increases the pool of free, tyrosine-phosphorylated beta-catenin, and results in loss of N-cadherin function. N-cadherin lacking this same region of the PTP1B target site does not associate with PTP1B or beta-catenin and is not efficiently expressed at the cell surface of transfected L cells. Thus, interaction of PTP1B with N-cadherin is essential for its association with beta-catenin, stable expression at the cell surface, and consequently, cadherin function.