We have used okadaic acid (OA), a cell-permeable inhibitor of serine/threonine protein phosphatase types 1 (PP-1) and 2A (PP-2A), to demonstrate that the subcellular distribution of glucocorticoid receptor (GR) in rat fibroblasts is influenced by its phosphorylation state. Nuclear GRs in OA-treated cells retain transcriptional enhancement activity. Nuclear import or export of hormone agonist-bound GRs is not affected by OA. However, a dose of OA that fully inhibits PP-2A and partially inhibits PP-1, but not a lower dose that only partially inhibits PP-2A, leads to inefficient nuclear retention of agonist-bound GRs, and their redistribution into the cytoplasm. These receptors appear to be trapped in the cytoplasmic compartment and are unable to recycle (i.e. reenter the nucleus). Addition of OA during different steps of GR recycling demonstrates that OA must be present during nuclear export of GRs to block GR recycling. A direct role for PP-1 and/or PP-2A in GR recycling is suggested by site-specific hyperphosphorylation of GRs in vivo during OA inhibition of recycling. These are the same sites that undergo in vitro site-specific dephosphorylation by PP-1 and PP-2A. The block in GR recycling that results from inhibition of PP-1 and/or PP-2A resembles effects previously observed in v-mos-transformed rat fibroblasts. Interestingly, OA inhibition of PP-2A in v-mos-transformed cells leads to the reversal of oncoprotein effects on GR recycling and retention of receptors within the nuclear compartment. We propose that GR recycling is influenced by the activities of distinct protein phosphatases (PP-1 and/or PP-2A), and that the interference of this pathway observed in v-mos-transformed cells may be the result of effects of the oncoprotein on the phosphatases or a specific subset of their targets.