PZR is an immunoglobulin superfamily protein that specifically binds tyrosine phosphatase SHP-2 through its intracellular immunoreceptor tyrosine-based inhibitory motifs (ITIMs). Here we report a novel isoform of the protein designated PZR1b. PZR1b shares the same extracellular region with PZR, but it lacks intracellular ITIMs and thus the ability to recruit SHP-2. Genomic sequence analysis revealed that PZR1b is resulted from alternative gene splicing of the PZR gene localized at chromosome 1q24. Like PZR, PZR1b is widely expressed. However, the relative ratio of two forms varies in different human tissues and cells. More importantly, overexpression of PZR1b in human HT-1080 cells had a dominant negative effect by blocking concanavalin A-induced tyrosine phosphorylation of full-length PZR and recruitment of tyrosine phosphatase SHP-2. Therefore, PZR1b may have an important role in cell signaling by counteracting with PZR.