Indiana University-Purdue University Indianapolis (IUPUI) / Phosphatases of regenerating liver, consisting of PRL-1, PRL-2 and PRL-3, belong to a novel protein tyrosine phosphatases subfamily, whose overexpression promotes cell proliferation, migration and invasion and contributes to tumorigenesis and metastasis. However, although great efforts have been made to uncover the biological function of PRLs, limited knowledge is available on the underlying mechanism of PRLs’ actions, therapeutic value by targeting PRLs, as well as the physiological function of PRLs in vivo. To answer these questions, we first screened a phage display library and identified p115 RhoGAP as a novel PRL-1 binding partner. Mechanistically, we demonstrated that PRL-1 activates RhoA and ERK1/2 by decreasing the association between active RhoA with GAP domain of p115 RhoGAP, and displacing MEKK1 from the SH3 domain of p115 RhoGAP, respectively, leading to enhanced cell proliferation and migration. Secondly, structure-based virtual screening was employed to discover small molecule inhibitors blocking PRL-1 trimer formation which has been suggested to play an important role for PRL-1 mediated oncogenesis. We identified Cmpd-43 as a novel PRL-1 trimer disruptor. Structural study demonstrated the binding mode of PRL-1 with the trimer disruptor. Most importantly, cellular data revealed that Cmpd-43 inhibited PRL-1 induced cell proliferation and migration in breast cancer cell line MDA-MB-231 and lung cancer cell line H1299. Finally, in order to investigate the physiological function of PRLs, we generated mouse knockout models for Prl-1, Prl-2 and Prl-3. Although mice deficient for Prl-1 and Prl-3 were normally developed, Prl-2-null mice displayed growth retardation, impaired male reproductive ability and insufficient hematopoiesis. To further investigate the in vivo function of Prl-1, we generated Prl-1-/-/Prl-2+/- and Prl-1+/-/Prl-2-/- mice. Similar to Prl-2 deficient male mice, Prl-1-/-/Prl-2+/- males also have impaired spermatogenesis and reproductivity. More strikingly, Prl-1+/-/Prl-2-/- mice are completely infertile, suggesting that, in addition to PRL-2, PRL-1 also plays an important role in maintaining normal testis function. In summary, these studies demonstrated for the first time that PRL-1 activates ERK1/2 and RhoA through the novel interaction with p115 RhoGAP, targeting PRL-1 trimer interface is a novel anti-cancer therapeutic treatment and both PRL-1 and PRL-2 contribute to spermatogenesis and male mice reproductivity.