A multiple sequence alignment of 44 serine/threonine-specific protein phosphatases has been performed. This reveals the position of a common conserved catalytic core, the location of invariant residues, insertions and deletions. The multiple alignment has been used to guide and improve a consensus secondary-structure prediction for the common catalytic core. The location of insertions and deletions has aided in defining the positions of surface loops and turns. The prediction suggests that the core protein phosphatase structure comprises two domains: the first has a single, beta sheet flanked by alpha helices, while the second is predominantly alpha helical. Knowledge of the core secondary structures provides a guide for the design of site-directed-mutagenesis experiments that will not disrupt the native phosphatase fold. A sequence similarity between eukaryotic serine/threonine protein phosphatases and the Escherichia coli diadenosine tetraphosphatase has been identified. This extends over the N-terminal 100 residues of bacteriophage phosphatases and E. coli diadenosine tetraphosphatase. Residues which are invariant amongst these classes are likely to be important in catalysis and protein folding. These include Arg92, Asn138, Asp59, Asp88, Gly58, Gly62, Gly87, Gly93, Gly137, His61, His139 and Val90 and fall into three clusters with the consensus sequences GD(IVTL)HG, GD(LYF)V(DA)RG and GNH, where brackets surround alternative amino acids. The first two consensus sequences are predicted to fall in the beta-alpha and beta-beta loops of a beta-alpha-beta-beta secondary-structure motif. This places the predicted phosphate-binding site at the N-terminus of the alpha helix, where phosphate binding may be stabilised by the alpha-helix dipole.