The fluorogenic substrate 6,8-difluoro-4-methylumbiliferyl phosphate (DIFMUP) has been widely used for the detection of serine and threonine phosphatase activities. Here we describe the use of this substrate for the characterization of protein tyrosine phosphatases (PTPs) and for the screening for PTP inhibitors. The measured kinetic and inhibitor constants for DIFMUP cleavage were comparable with those of the widely used but less discriminative and practicable substrates, para-nitrophenylphosphate and phosphotyrosine-containing peptides, respectively. Furthermore, the continuous and highly sensitive assay allows fast and accurate investigations of the type, kinetic behavior, and binding mode of small-molecule inhibitors. We discuss the validation of this assay system for various PTPs and its use in inhibitor screening for PTP1B.