The Saccharomyces cerevisiae gene PPZ1 codes for a 692-residues protein that shows in its carboxyl-terminal half about 60% identity with the catalytic subunit of mammalian and yeast protein phosphatase-1 and that is involved in salt homeostasis. The complete PPZ1 protein has been successfully expressed as a soluble glutathione-S-transferase fusion protein. The recombinant protein, after purification by a single affinity chromatography step, displayed phosphatase activity towards a number of substrates, including myelin basic protein, histone 2A and casein, but was ineffective in dephosphorylating glycogen phosphorylase. It was also active towards p-nitrophenylphosphate. The activity was severalfold increased by the presence of Mn2+ ions and by limited trypsinolysis. The enzyme was inhibited by okadaic acid and microcystin-LR at concentrations comparable to what is found for type 1 protein phosphatase although it was much less sensitive to inhibitor-2. The recombinant protein was phosphorylated in vitro by cAMP-dependent protein kinase, protein kinase C and casein kinase-2. Phosphorylation affected preferentially sites located in the amino-terminal half of the protein and did not alter the activity of the phosphatase.