A novel hypersensitive resistance (HR) in Capsicum baccatum var. pendulum against the bacterial spot of pepper pathogen, Xanthomonas gardneri, was introgressed into C. annuum cv. Early Calwonder (ECW) to create the near-isogenic line designated as ECW-70R. A corresponding avirulence gene avrBs7, in X. gardneri elicited a strong HR in ECW-70R. A homolog of avrBs7, avrBs1.1, was found in X. euvesicatoria 85-10, which showed delayed HR on ECW-70R leaves. Genetic analysis confirmed the presence of a single dominant resistance gene, Bs7, corresponding to the two avr genes. Both AvrBs7 and AvrBs1.1 share a consensus protein tyrosine phosphatase (PTP) active site domain and can dephosphorylate para-nitrophenyl phosphate. Mutation of Cys(265) to Ser in the PTP domain and subsequent loss of enzymatic activity and HR activity indicated the importance of the PTP domain in the recognition of the Avr protein by the Bs7 gene transcripts. Superpositioning of AvrBs7 and AvrBs1.1 homology models indicated variation in the geometry of the loops adjacent to the active sites. These predicted structural differences might be responsible for the differences in HR timing due to differential activation of the resistance gene. Mutating the PTP domain of AvrBs1.1 to match that of AvrBs7 failed to activate HR on ECW-70R, indicating the possibility of differential substrate specificities between AvrBs1.1 and AvrBs7.