The cellular location and substrate specificity of the catalytic subunit (C) of protein phosphatase 2A (PP2A) depend on its interaction with A and B subunits. The distribution of epitope-tagged wild-type or mutated C subunits was studied by transient expression in COS-7 cells. Wild-type tagged C expressed at low levels formed ABC trimer and AC dimer like the endogenous C. Single mutations of C at the site of phosphorylation (Y307F) or carboxymethylation (L309Q) resulted in recovery of only AC dimer. Double mutation of both residues resulted in association of C with alpha 4 protein (alpha 4), a novel subunit of PP2A, instead of with A and B subunits. Thus, the distribution of C between ABC trimer, AC dimer, and alpha 4C complexes can be affected by modifications of the C-terminal residues. The alpha 4 protein is a homologue of the yeast Tap42 protein that functions downstream of the TOR protein to regulate protein synthesis. Transient overexpression of FLAG-alpha 4 resulted in increased dephosphorylation of elongation factor 2, but had no effect on phosphorylation of either p70S6 kinase or PHAS-I (eIF4E-BP). Signals that affect phosphorylation or methylation of the C subunit of PP2A may promote subunit exchange and direct phosphatase activity to specific intracellular substrates.