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Protein tyrosine phosphatases (PTPs) are comprised of two superfamilies, the phosphatase I superfamily containing a single low-molecular-weight PTP (lmwPTP) family and the phosphatase II superfamily including both the higher-molecular-weight PTP (hmwPTP) and the dual-specificity phosphatase (DSP) families. The phosphatase I and H superfamilies are often considered to be the result of convergent evolution. The PTP sequence and structure analyses indicate that lmwPTPs, hmwPTPs, and DSPs share similar structures, functions, and a common signature motif, although they have low sequence identities and a different order of active sites in sequence or a circular permutation. The results of this work suggest that lmwPTPs and hmwPTPs/DSPs are remotely related in evolution. The earliest ancestral gene of PTPs could be from a short fragment containing about 90similar to120 nucleotides or 30similar to40 residues; however, a probable full PTP ancestral gene contained one transcript unit with two lmwPTP genes. All three PTP families may have resulted from a common ancestral gene by a series of duplications, fusions, and circular permutations. The circular permutation in PTPs is caused by a reading frame difference, which is similar to that in DNA methyltransferases. Nevertheless, the evolutionary mechanism of circular permutation in PTP genes seems to be more complicated than that in DNA methyltransferase genes. Both mechanisms in PTPs and DNA methyltransferases can be used to explain how some protein families and superfamilies came to be formed by circular permutations during molecular evolution.