MAP kinases (MAPKs), which control mitogenic signal transduction in all eukaryotic organisms, are inactivated by dual specificity MAPK phosphatases (DS-MKPs). Recent studies reveal that substrate specificity and enzymatic activity of MKPs are tightly controlled not only by the conserved C-terminal phosphatase domain but also by an N-terminal (NT) kinase-binding domain. Notably, MKPs that consist of a kinase-binding domain and a phosphatase domain exhibit little phosphatase activity in the absence of their physiological substrates. MKP binding to a specific MAPK results in enzymatic activation of the phosphatase in a substrate-induced activation mechanism. This direct coupling of inactivation of an MAPK to activation of an MKP provides a tightly controlled regulation that enables these two key enzymes to keep each other in check, thus guaranteeing the fidelity of signal transduction. This review discusses the recent understanding of structure and regulation of the large family of dual specificity MKPs, which can be divided into four subgroups according to their functional domains and mechanism of substrate recognition and enzymatic regulation. Moreover, detailed comparison of the structural basis between this unique substrate-induced activation mechanism and the common auto-inhibition mechanism is provided.