The levels of Pim-1, a serine/threonine kinase, increase during phorbol myristate acetate (PMA)-induced myeloid cell differentiation. The tyrosine phosphatase PTP-U2S is also associated with PMA-induced differentiation of myeloid cells and has been shown to enhance differentiation and the onset of apoptosis. PTP-U2S contains a Pim-1 phosphorylation consensus sequence, KKRKLTN, which is efficiently phosphorylated by Pim-1. Immunoprecipitated PTP-U2S from U937 cells was phosphorylated by recombinant Pim-1, resulting in a decrease in its phosphatase activity. During PMA-induced differentiation, U937 cells transfected with the dominant negative Pim-1 underwent rapid differentiation and accelerated apoptosis. The opposite effect was observed for wild-type Pim-1. Our results, therefore, provide compelling evidence that Pim-1 functions to negatively regulate PMA-induced differentiation in part through the phosphorylation of PTP-U2S. Together these data suggest that Pim-1 phosphorylates PTP-U2S in vivo to decrease the phosphatase activity that may be necessary to prevent the premature onset of apoptosis following differentiation.