Serine/threonine protein phosphatases are central mediators of phosphorylation-dependent signals in eukaryotes and a variety of pathogenic bacteria. Here, we report the crystal structure of the intracellular catalytic domain of Mycobacterium tuberculosis PstPpp, a membrane-anchored phosphatase in the PP2C family. Despite sharing the fold and two-metal center of human PP2Calpha, the PstPpp catalytic domain binds a third Mn(2+) in a site created by a large shift in a previously unrecognized flap subdomain adjacent to the active site. Mutations in this site selectively increased the Michaelis constant for Mn(2+) in the reaction of a noncognate, small-molecule substrate, p-nitrophenyl phosphate. The PstP/Ppp structure reveals core functional motifs that advance the framework for understanding the mechanisms of substrate recognition, catalysis, and regulation of PP2C phosphatases.