Fas is a cell surface receptor that controls a poorly understood signal transduction pathway that leads to cell death by means of apoptosis. A protein tyrosine phosphatase, FAP-1, capable of interacting with the cytosolic domain of Fas, was identified. The carboxyl terminal 15 amino acids of Fas are necessary and sufficient for interaction with FAP-1. FAP-1 expression is highest in tissues and cell lines that are relatively resistant to Fas-mediated cytotoxicity. Gene transfer-mediated elevations in FAP-1 partially abolished Fas-induced apoptosis in a T cell line. These findings are consistent with an inhibitory effect of FAP-1 on Fas signal transduction.