1. Whitehead Institute for Biomedical Research, Cambridge, Massachusetts 02142, USA
2. Department of Biology, Massachusetts Institute of Technology, Cambridge, Massachusetts 02142, USA
3. The Institute for Genomic Research, Rockville, Maryland 20850, USA
4. These authors contributed equally to this work
5. Present address: Department of Developmental Biology, Stanford University School of Medicine, Stanford, California 94305, USA

Correspondence to: Ilaria Rebay^1,2 Email: rebay@wi.mit.edu

Abstract

Post-translational modifications provide sensitive and flexible mechanisms to dynamically modulate protein function in response to specific signalling inputs¹. In the case of transcription factors, changes in phosphorylation state can influence protein stability, conformation, subcellular localization, cofactor interactions, transactivation potential and transcriptional output¹. Here we show that the evolutionarily conserved transcription factor Eyes absent (Eya)^{2, 3} belongs to the phosphatase subgroup of the haloacid dehalogenase (HAD) superfamily^{4, 5}, and propose a function for it as a non-thiol-based protein tyrosine phosphatase. Experiments performed in cultured Drosophila cells and in vitro indicate that Eyes absent has intrinsic protein tyrosine phosphatase activity and can autocatalytically dephosphorylate itself. Confirming the biological significance of this function, mutations that disrupt the phosphatase active site severely compromise the ability of Eyes absent to promote eye specification and development in Drosophila. Given the functional importance of phosphorylation-dependent modulation of transcription factor activity, this evidence for a nuclear transcriptional coactivator with intrinsic phosphatase activity suggests an unanticipated method of fine-tuning transcriptional regulation.