Degenerate oligonucleotides were used to selectively amplify yeast genomic sequences related to Ser/Thr protein phosphatases. Among the sequences obtained, clone ST4-2 was found to code for a novel sequence related to previously known phosphatases. A size-selected yeast genomic library was constructed and screened using clone ST4-2 as probe, and one positive clone, named PPG, was isolated. DNA sequencing of a 1.8-kilobase pair fragment of this clone revealed an open reading frame of 1104 base pairs which codes for a 368-amino acid protein. On the basis of its amino acid sequence, the product of gene PPG would be an acidic protein, structurally more related to type 2A than to type 1 or 2B phosphatases, and is characterized by an extension of about 50 amino acids at the carboxyl terminus. The gene, which is located in chromosome XIV, is expressed as a 1.3-kilobase mRNA and is not essential for growth. Haploid mutants carrying a disrupted copy of the gene were able to grow in glucose as well as in other carbon sources, but they accumulated less glycogen than the wild type strain. However, the state of activation of glycogen synthase was essentially identical in wild type and mutant cells. The finding that, in early exponential phase, mutant cells contain higher levels of glycogen phosphorylase a, in addition to a lower amount of total glycogen synthase activity observed in medium-late exponential phase, could account for the difference found in glycogen accumulation.