The identity of the protein tyrosine phosphatases (PTPs) regulating cell death and responses to neurotrophins during neural development remain unknown. To determine if the leukocyte common antigen‐related (LAR) PTP regulates these processes, PC12 cells were made LAR‐deficient via stable transfection with an LAR antisense transgene. LAR‐deficient cells demonstrated a stable novel phenotype, including a two‐fold increase in nerve growth factor‐ but not fibroblast growth factor‐induced neurite outgrowth. Upon serum‐deprivation, LAR‐deficient cells exhibited a two‐ to three‐fold decrease in cell death. The findings that an endogenous PTP promotes cell death and counter‐regulates neurotrophin actions introduce a major new receptor gene family to neurotrophic processes and suggest novel strategies for preventing cell death and augmenting neurotrophin function. © 2000 John Wiley & Sons, Inc. J Neurobiol 42: 477–486, 2000