The regulation of tyrosine phosphorylation is recognized as an important developmental mechanism. Both addition and removal of phosphate moieties on tyrosine residues are tightly regulated during development. Originally, most attention focused on the role of tyrosine kinases during development, but more recently, the developmental importance of tyrosine phosphatases has been gaining interest. Receptor protein tyrosine phosphatases (RPTPs) are of particular interest to developmental biologists because the extracellular domains of RPTPs are similar to those of cell adhesion molecules (CAMs). This suggests that RPTPs may have functions in development similar to CAMs. This review focuses on the role of RPTPs in development of the nervous system in processes such as axon guidance, synapse formation, and neural tissue morphogenesis.