A versatile assay for protein tyrosine phosphatases (PTP) employing 3-nitrophosphotyrosine containing peptidic substrates is described. These therapeutically important phosphatases feature in signal transduction pathways. The assay involves spectrophotometric detection of 3-nitrotyrosine production from 3-nitrophosphotyrosine containing peptidic substrates, which are accepted by many PTPs. Compared to conventional chromogenic phosphate derivatives, the more realistic peptidic substrates allow evaluating substrate specificity. The assay's applicability is demonstrated by determining kinetic parameters for several PTP-substrate combinations and inhibitor evaluation, as well as detection of PTP activity in lysates. The convenient new assay may assist further adoption of PTPs in drug development.