Protein phosphatase 1 (PP1) is expressed in mammalian cells as three closely related isoforms, alpha, beta/delta and gamma1, which are encoded by separate genes. It has yet to be determined whether the separate isoforms behave in a similar fashion or play distinct roles in vivo. We report here on analyses by fluorescence microscopy of functional and fluorescently tagged PP1 isoforms in live cells. PP1alpha and PP1gamma fluorescent protein fusions show largely complimentary localization patterns, particularly within the nucleus where tagged PP1gamma accumulates in the nucleolus, whereas tagged PP1alpha is primarily found in the nucleoplasm. Overexpression of NIPP1 (nuclear inhibitor of PP1), a PP1 targeting subunit that accumulates at interchromatin granule clusters in the nucleoplasm, results in a retargeting of both isoforms to these structures, indicating that steady-state localization is based, at least in part, on relative affinities for various targeting subunits. Photobleaching analyses show that PP1gamma is rapidly exchanging between the nucleolar, nucleoplasmic and cytoplasmic compartments. Fluorescence resonance energy transfer (FRET) analyses indicate that the direct interaction of the two proteins predominantly occurs at or near interchromatin granule clusters. These data indicate that PP1 isoforms are highly mobile in cells and can be dynamically (re)localized through direct interaction with targeting subunits.