One of the earliest marks of a double-strand break (DSB) in eukaryotes is serine phosphorylation of the histone variant H2AX at the carboxy-terminal SQE motif to create gammaH2AX-containing nucleosomes. Budding-yeast histone H2A is phosphorylated in a similar manner by the checkpoint kinases Tel1 and Mec1 (ref. 2; orthologous to mammalian ATM and ATR, respectively) over a 50-kilobase region surrounding the DSB. This modification is important for recruiting numerous DSB-recognition and repair factors to the break site, including DNA damage checkpoint proteins, chromatin remodellers and cohesins. Multiple mechanisms for eliminating gammaH2AX as DNA repair completes are possible, including removal by histone exchange followed potentially by degradation, or, alternatively, dephosphorylation. Here we describe a three-protein complex (HTP-C, for histone H2A phosphatase complex) containing the phosphatase Pph3 that regulates the phosphorylation status of gammaH2AX in vivo and efficiently dephosphorylates gammaH2AX in vitro. gammaH2AX is lost from chromatin surrounding a DSB independently of the HTP-C, indicating that the phosphatase targets gammaH2AX after its displacement from DNA. The dephosphorylation of gammaH2AX by the HTP-C is necessary for efficient recovery from the DNA damage checkpoint.