The use of adeno-associated virus type 2 (AAV) vectors has gained attention as a potentially useful alternative to the more commonly used retrovirus and adenovirus vectors for human gene therapy. However, the transduction efficiency of AAV vectors varies greatly in different cells and tissues in vitro and in vivo. We have documented that a cellular protein that binds the immunosuppressant drug FK506, termed the FK506-binding protein (FKBP52), interacts with the single-stranded D sequence within the AAV inverted terminal repeats, inhibits viral second-strand DNA synthesis, and consequently limits high-efficiency transgene expression (K. Qing, J. Hansen, K. A. Weigel-Kelley, M. Tan, S. Zhou, and A. Srivastava, J. Virol., 75: 8968-8976, 2001). FKBP52 can be phosphorylated at both tyrosine and serine/threonine residues, but only the phosphorylated forms of FKBP52 interact with the D sequence. Furthermore, the tyrosine-phosphorylated FKBP52 inhibits AAV second-strand DNA synthesis by greater than 90%, and the serine/threonine-phosphorylated FKBP52 causes approximately 40% inhibition, whereas the dephosphorylated FKBP52 has no effect on AAV second-strand DNA synthesis. In the present study, we have identified that the tyrosine-phosphorylated form of FKBP52 is a substrate for the cellular T-cell protein tyrosine phosphatase (TC-PTP). Deliberate overexpression of the murine wild-type (wt) TC-PTP gene, but not that of a cysteine-to-serine (C-S) mutant, caused tyrosine dephosphorylation of FKBP52, leading to efficient viral second-strand DNA synthesis and resulting in a significant increase in AAV-mediated transduction efficiency in HeLa cells in vitro. Both wt and C-S mutant TC-PTP expression cassettes were also used to generate transgenic mice. Primitive hematopoietic stem/progenitor cells from wt TC-PTP-transgenic mice, but not from C-S mutant TC-PTP-transgenic mice, could be successfully transduced by recombinant AAV vectors. These studies corroborate the fact that tyrosine phosphorylation of the cellular FKBP52 protein strongly influences AAV transduction efficiency, which may have important implications in the optimal use of AAV vectors in human gene therapy.