Insulin and epidermal growth factor (EGF) induce distinct kinetics of S6 kinase activation and S6 phosphorylation in Swiss 3T3 cells. Both events are differentially regulated by specific phosphatases. The major S6 phosphatase in cell extracts was identified as a type 1 enzyme by its chromatographic properties, its sensitivity to inhibitor 2, and its substrate specificity. This enzyme is different from the major S6 kinase phosphatase, which is a type 2A enzyme. Insulin at physiological concentrations causes up to a 2-fold activation of a type 1 S6 phosphatase, whereas at higher concentrations this effect is significantly diminished. EGF alone has little effect on this enzyme, and with both agents together the total phosphatase activity remains basal. The results are consistent with the phosphorylation state of S6 observed in vivo and suggest a role of phosphatase type 1 in the regulation of protein synthesis.