Previous studies demonstrated that activation of T lymphocytes by phorbol ester or mitogenic lectin leads to phosphorylation of Ser 126 of the CD3 antigen gamma chain, whereas treatment with ionomycin results in phosphorylation of both Ser 123 and 126 [Davies, A. A. et al. (1987) J. Biol. Chem. 262, 10918-10921]. In the present study, the dephosphorylation of Ser 123 and Ser 126 of the gamma chain was investigated. Phorbol-ester-induced phosphorylation of the gamma-chain Ser 126 in vivo was reversed following removal of phorbol ester. Dephosphorylation of both Ser 123 and 126 was also observed in vitro using the microsome fraction of T lymphocytes. In order to identify the phosphatases acting at these two sites, the immunoprecipitated gamma chain was used as substrate either following treatment with protein kinase C in vitro, in which case phosphorylation occurs mainly at Ser 123, or following in vivo phosphorylation of Ser 126. Purified oligomeric forms of the polycation-stimulated phosphatases were more effective in dephosphorylating both phosphorylated forms of the gamma chain compared with equivalent amounts of ATP,Mg2+-dependent phosphatases or calcineurin. By using phosphopeptide analogues of the CD3 gamma chain containing Ser 123 or Ser 126 as substrates (A3 and A6), it was shown that polycation-stimulated phosphatases selectively dephosphorylated Ser 123 compared to Ser 126. In order to determine which phosphatases dephosphorylate the gamma chain in microsomes, A3 and A6 were used as substrates for characterising phosphatases in microsomes from human T leukaemia Jurkat 6 cells. Three phosphopeptide phosphatases (250-400 kDa) co-eluted through five purification steps with three forms of polycation-stimulated phosphorylase phosphatase. The partially purified A3/A6 phosphopeptide phosphatases were insensitive to Ca2+, calmodulin and inhibitor-1, and dephosphorylated A3 preferentially compared with A6. A latent form of microsomal ATP,Mg2+-dependent phosphorylase phosphatase was stimulated 10-fold by trypsinisation, but did not dephosphorylate phosphopeptides A3 and A6. The results show that high-Mr forms of polycation-stimulated phosphatases are the only enzymes in human T leukaemia cell microsomes which dephosphorylate gamma chain phosphopeptides. The data point to an important role for polycation-stimulated phosphatases in regulating the phosphorylation state, and so function(s), of the CD3 antigen.