Protein phosphorylation appears to be a universal mechanism of protein regulation. Genomics has provided the means to compile inventories of protein phosphatases across a wide selection of organisms and this has supplied insights into the evolution of this group of enzymes. Protein phosphatases evolved independently several times yielding the groups we observe today. Starting from a core catalytic domain, phosphatases evolved by a series of gene duplication events and by adopting the use of regulatory subunits and/or fusion with novel functional modules or domains. Recent analyses also suggest that the serine/threonine specific enzymes are more ancient than the PTPs (protein tyrosine phosphatases). It is likely that the latter played a key role at the onset of metazoan evolution in conjunction with the tremendous expansion of tyrosine kinases and PTPs at this point. In the present review, we discuss the evolution of the PTPs, the serine/threonine specific PPP (phosphoprotein phosphatase) and PPM (metallo-dependent protein phosphatase) families and the more recently discovered phosphatases that utilize an aspartate-based catalytic mechanism. We will also highlight examples of convergent evolution and several phosphatases which are unique to plants.