Exit from metaphase of the cell cycle requires inactivation of MPF, a stoichiometric complex between the cdc2 catalytic and the cyclin B regulatory subunits, as well as that of cyclin A-cdc2 kinase. Inactivation of both complexes depends on proteolytic degradation of the cyclin subunit, yet cyclin proteolysis is not sufficient to inactivate the H1 kinase activity of cdc2. Genetic evidence strongly suggests that type 1 phosphatase plays a key role in the metaphase-anaphase transition of the cell cycle. Here we report that inhibition of both type 1 and type 2A phosphatases by okadaic acid allows cyclin degradation to occur, but prevents cdc2 kinase inactivation. Complete inhibition of type 2A phosphatase alone is not sufficient to prevent cdc2 kinase inactivation following cyclin proteolysis. We show further that residue 161 of cdc2 is phosphorylated in active cyclin A or cyclin B complexes at metaphase, whilst unassociated cdc2 is not phosphorylated. Proteolysis of cyclin releases a free cdc2 subunit, which subsequently undergoes dephosphorylation and then migrates more slowly than its Thr161 phosphorylated counterpart in Laemmli gels. Removal of phosphothreonine 161 requires cyclin proteolysis. However, it does not occur even after cyclin proteolysis, when both type 1 and type 2A phosphatases are inhibited. We conclude that both cyclin degradation and dephosphorylation of Thr161 on cdc2, catalysed at least in part by type 1 phosphatase, are required to inactivate either cyclin B- or cyclin A-cdc2 kinases and thus for cells to exit from M phase.