We have isolated a cDNA homologous to known dual-specificity phosphatases from a mouse macrophage cDNA library and termed it MKP-M (for mitogen-activated protein kinase phosphatase isolated from macrophages). Three other presumed splice variant isoforms have also been identified for MKP-M. The longest and most abundant mRNA contains an open reading frame corresponding to 677 amino acids and produces an 80-kDa protein. The deduced amino acid sequence of MKP-M is most similar to those of hVH-5 (or mouse M3/6) and VHP1, a Caenorhabditis elegans tyrosine phosphatase. It includes an N-terminal rhodanase homology domain, the extended active-site sequence motif (V/L)X(V/I)HCXAG(I/V)SRSXT(I/V)XXAY(L/I)M (where X is any amino acid), and a C-terminal PEST sequence. Northern blot analysis revealed a dominant MKP-M mRNA species of approximately 5.5 kb detected ubiquitously among all tissues examined. MKP-M was constitutively expressed in mouse macrophage cell lines, and its expression levels were rapidly increased by lipopolysaccharide (LPS) stimulation but not by tumor necrosis factor alpha (TNF-alpha), gamma interferon, interleukin-2 (IL-2), or IL-15 stimulation. Immunocytochemical analysis showed MKP-M to be present within cytosol. When expressed in COS7 cells, MKP-M blocks activation of mitogen-activated protein kinases with the selectivity c-Jun N-terminal kinase (JNK) >> p38 = extracellular signal-regulated kinase. Furthermore, expression of a catalytically inactive form of MKP-M in a mouse macrophage cell line increased the intensity and duration of JNK activation and TNF-alpha secretion after LPS stimulation, suggesting that MKP-M is at least partially responsible for the desensitization of LPS-mediated JNK activation and cytokine secretion in macrophages.