Receptor protein tyrosine phosphatases (RPTPs) are key regulators of neuronal morphogenesis in a variety of different vertebrate and invertebrate systems, yet the mechanisms by which these proteins regulate central nervous system development are poorly understood. In the past few years, studies have begun to outline possible models for RPTP function by demonstrating in vivo roles for RPTPs in axon outgrowth, guidance, and synaptogenesis. In addition, the crystal structures of several RPTPs have been solved, numerous downstream effectors of RPTP signaling have been identified, and a small number of RPTP ligands have been described. In this review, we focus on how RPTPs transduce signals from the extracellular environment to the cytoplasm, using a detailed comparative analysis of the different RPTP subfamilies. Focusing on the roles RPTPs play in the development of the central nervous system, we discuss how the elucidation of RPTP crystal structures, the biochemical analysis of phosphatase enzyme catalysis, and the characterization of complex signal transduction cascades downstream of RPTPs have generated testable models of RPTP structure and function.