The insulin receptor possesses tyrosine kinase activity which is thought to mediate the biological effects of insulin upon target cells. pp120 is a liver-specific glycoprotein of apparent molecular size of 120 kDa that is phosphorylated on tyrosine residues by the receptors for insulin, insulin-like growth factor-I, and epidermal growth factor. Previously, we demonstrated that pp120 is identical to a liver-specific ecto-ATPase. In the present study, we have cloned the rat gene encoding pp120/ecto-ATPase. The gene is contained within approximately 15 kilobases of genomic DNA, and consists of nine exons interrupted by eight introns. Using the reverse transcriptase/polymerase chain reaction, we isolated cDNA clones complementary to rat liver mRNA encoding pp120/ecto-ATPase. Sequence analysis indicated the presence of two populations of cDNA's that differ by the presence or absence of a 53-base pair (bp) fragment encoding the juxta-membrane region of the cytoplasmic domain. By cloning the corresponding region of the ecto-ATPase gene, we demonstrated that the 53-bp represents exon 7 of the gene. This 53-bp exon undergoes alternative splicing, thereby giving rise to two mRNA variants. Deletion of this 53-bp cassette exon introduces a frameshift, and results in a premature chain termination codon that truncates the cytoplasmic domain. The truncated cytoplasmic domain contains 10 rather than 71 amino acid residues. Because the short isoform of ecto-ATPase lacks the putative sites for tyrosine- and serine-specific phosphorylation, this alternative splicing may have a major effect upon the physiological function of the enzyme.