The phosphorylation state of any protein represents a balance of the actions of specific protein kinases and protein phosphatases. Many protein phosphatases are highly enriched in, or exclusive to, the nuclear compartment, where they dephosphorylate key substrates to regulate various nuclear processes. In this review we will discuss recent findings that define the role of nuclear protein phosphatases in controlling transforming growth factor-beta (TGFbeta) and bone-morphogenetic protein (BMP) signalling, the DNA-damage response, RNA processing, cell-cycle progression and gene transcription.