Reversible protein phosphorylation is a fundamental mechanism by which many biological functions are regulated. Achievement of such control requires the coordinated action of the interconverting enzymes, the protein kinases and protein phosphatases. By comparison with protein kinases, a limited number of protein phosphatase catalytic subunits are present in the cell, which raises the question of how such a small number of dephosphorylating enzymes can counterbalance the action of the more numerous protein kinases. In mammalian cells, four major classes of Ser/Thr-specific phosphatase catalytic subunits have been identified, comprising two distinct gene families. The high degree of homology among members of the same family, PP1, PP2A and PP2B, and the high degree of evolutionary conservation between organisms as divergent as mammals and yeast, implies that these enzymes are involved in fundamental cell functions. Type 1 enzymes appear to acquire specificity by association with targeting regulatory subunits which direct the enzymes to specific cellular compartments, confer substrate specificity and control enzyme activity. In spite of the progress made in determining the structure of the PP2A subunits, very little is known about the control of this activity and about substrate selection. Recent studies have unravelled a significant number of regulatory subunits. The potential existence of five distinct B or B-related polypeptides, some of which are present in multiple isoforms, two A and two C subunit isoforms, raises the possibility that a combinatorial association could generate a large number of specific PP2A forms with different substrate specificity and/or cellular localization. Moreover, biochemical, biological and genetic studies all concur in suggesting that the regulatory subunits may play an important role in determining the properties of the Ser/Thr protein phosphatases and hence their physiological functions.