Phosphatidic acid phosphatase (PAP) converts phosphatidic acid to diacylglycerol, thus regulating the de novo synthesis of glycerolipids and also signal transduction mediated by phospholipase D. We initially succeeded in the cDNA cloning of the mouse 35 kDa PAP bound to plasma membranes (type 2 enzyme). This work subsequently led us to the identification of two human PAP isozymes designated 2a and 2b. A third human PAP isozyme (2c) has also been described. The cloned enzymes are, in common, N-glycosylated and possess six transmembrane domains. The transmembrane dispositions of these enzymes are predicted and the catalytic sites are tentatively located in the 2nd and 3rd extracellular loops, thus suggesting that the type 2 PAPs may act as ecto-enzymes dephosphorylating exogenous substrates. Furthermore, the type 2 PAPs have been proposed to belong to a novel phosphatase superfamily consisting of a number of soluble and membrane-bound enzymes. In vitro enzyme assays show that the type 2 PAPs can dephosphorylate lyso-phosphatidate, ceramide-1-phosphate, sphingosine-1-phosphate and diacylglycerol pyrophosphate. Although the physiological implications of such a broad substrate specificity need to be further investigated, the type 2 PAPs appear to metabolize a wide range of lipid mediators derived from both glycero- and sphingolipids.