The proto-oncogene Pim-1 encodes a serine-threonine kinase which is a downstream effector of cytokine signaling and can enhance cell cycle progression by altering the activity of several cell cycle regulators among them the G1 specific inhibitor p21(Waf), the phosphatase Cdc25A and the kinase C-TAK1. Here, we demonstrate by using biochemical assays that Pim-1 can interact with the phosphatase Cdc25C and is able to directly phosphorylate the N-terminal region of the protein. Cdc25C is functionally related to Cdc25A but acts specifically at the G2/M cell cycle transition point and can be inactivated by C-TAK1-mediated phosphorylation. Immuno-fluorescence experiments showed that Pim-1 and Cdc25C co-localize in the cytoplasm of both epithelial and myeloid cells. We find that phosphorylation by Pim-1 enhances the phosphatase activity of Cdc25C and in transfected cells that are arrested in G2/M by bleomycin, Pim-1 can enhance progression into G1. Therefore, we propose that Pim-1 activates Cdc25C by a direct phosphorylation and can thereby assume the function of a positive cell cycle regulator at the G2/M transition.