The phosphorylation state and corresponding activity of the retinoblastoma tumor suppressor protein (Rb) are modulated by a balance of kinase and phosphatase activities. Here we characterize the association of Rb with the catalytic subunit of protein phosphatase 1 (PP1c). A crystal structure identifies an enzyme docking site in the Rb C-terminal domain that is required for efficient PP1c activity toward Rb. The phosphatase docking site overlaps with the known docking site for cyclin-dependent kinase (Cdk), and PP1 competition with Cdk-cyclins for Rb binding is sufficient to retain Rb activity and block cell-cycle advancement. These results provide the first detailed molecular insights into Rb activation and establish a novel mechanism for Rb regulation in which kinase and phosphatase compete for substrate docking.