The highly tyrosine phosphorylated adherens junction protein p120 catenin (p120) belongs to a subfamily of Armadillo-domain proteins. Cytosolic p120 is known to control cell motility through the regulation of Rho GTPase activity. Protein-tyrosine phosphatase non-receptor type 12 (PTP-PEST, also known as PTPN12) is a cytoplasmic tyrosine phosphatase that regulates fibroblast cell motility and Rho GTPase activity, and recent work has suggested that PTP-PEST acts on a junctional target to mediate its effects. On page 497, Sarita Sastry and colleagues investigate the regulation of p120 by PTP-PEST in epithelial cells. Using substrate trapping, the authors first establish that p120 is a substrate of PTP-PEST. Next, stable shRNA silencing of PTP-PEST shows that this phosphatase regulates shuttling of p120 from an E-cadherin-bound pool to a cytosolic pool. PTP-PEST knockdown leads to increased cytosolic localisation of p120, increased motility, and altered Rho GTPase activity through interaction with the p120 cytoplasmic binding partners VAV2, a guanine-nucleotide-exchange factor, and cortactin. Finally, the authors sought to determine the region of p120 that is targeted by PTP-PEST, and identify Y335, a novel tyrosine site in the N-terminal regulatory domain of p120. These data suggest PTP-PEST affects epithelial cell motility by controlling the distribution and phosphorylation of p120 and its availability to regulate Rho GTPases.