Angiotensin II (ANG II) subtype 2 (AT₂) receptors are expressed in the adult kidney, but the effects of AT₂ receptor activation are unclear. The proximal tubule cell line LLC-PK₁ was transfected with a plasmid containing cDNA for the rat AT₂ receptor. In transfected cells, specific binding of ¹²⁵I-labeled ANG II was detected (dissociation constant = 0.81 nM), with inhibition by the AT₂ antagonist PD-123319, and no effect of the AT₁ antagonist losartan. ANG II (10⁷ M) significantly inhibited mitogen-activated protein kinase (MAPK) activity in transfected cells, associated with decreased phosphorylation of the extracellular signal-related kinases ERK1 and ERK2. ANG II stimulated phosphotyrosine phosphatase activity within 5 min, an effect blocked by PD-123319 and the phosphatase inhibitor vanadate. In transfected cells, ANG II inhibited epidermal growth factor-stimulated [³H]thymidine incorporation, an effect reversed by vanadate. In contrast, vanadate did not block ANG II-stimulated apoptosis of transfected cells. In summary, AT₂ receptors in proximal tubule cells inhibit MAPK activity and stimulate phosphotyrosine phosphatase. AT₂ receptor-induced inhibition of mitogenesis is mediated by phosphatase activation, whereas effects on apoptosis are insensitive to phosphatase inhibition. The data suggest that AT₂ receptors inhibit cell growth via distinct signaling pathways in the proximal tubule.