Dual-specificity protein phosphatases (DSPs), a new family of protein tyrosine phosphatases (PTPs), are characterized by the ability to dephosphorylate both phospho-tyrosyl and phospho-seryl/threonyl residues. It has been known that most of the enzymes play important roles in the regulation of mitogenic signal transduction and control the cell cycle in response to extracellular stimuli. In this study, a novel human DSP gene named Dual-specificity Phosphatase18 (DUSP18) was isolated by large-scale sequencing analysis of a human fetal brain cDNA library. DUSP18 is localized at Chromosome 22 q12.1. Its cDNA is 2450 base pairs in length, encoding a 188-amino acid polypeptide in which a DSP motif but not a CH2 domain is included. RT-PCR revealed that the DUSP18 was widely expressed in different tissues. GST-DUSP18 fusion protein showed distinctive phosphatase activity toward p-nitrophenyl phosphate (pNPP), as well as oligopeptides containing pThr and pTyr, indicating that DUSP18 is a protein phosphatase with dual substrate specificity. The optimal condition for the reaction was pH 6.0 and 55 degrees C. Addition of Mn(2+) ions was able to enhance the enzyme activity while the activity was strongly inhibited by iodoaretic acid. Mutations in selected sites showed the importance of Asp-73, Cys-104, Arg-110 and Ser-111 in phosphatase activity of DUSP18.