We obtained two human cDNA clones encoding phosphatidic acid phosphatase (PAP) isozymes named PAP-2a (Mr = 32,158) and -2b (Mr = 35, 119), both of which contained six putative transmembrane domains. Both enzymes were glycosylated and cleaved by N-glycanase and endo-beta-galactosidase, thus suggesting their post-Golgi localization. PAP-2a and -2b shared 47% identical sequence and were judged to be the human counterparts of the previously sequenced mouse 35-kDa PAP(83% identity) and rat Dri42 protein (94% identity), respectively. Furthermore, the sequences of both PAPs were 34-39% identical to that of Drosophila Wunen protein. In view of the functions ascribed to Wunen and Dri42 in germ cell migration and epithelial differentiation, respectively, these findings unexpectedly suggest critical roles of PAP isoforms in cell growth and differentiation. Although the two PAPs hydrolyzed lysophosphatidate and ceramide-1-phosphate in addition to phosphatidate, the hydrolysis of sphingosine-1-phosphate was detected only for PAP-2b. PAP-2b was expressed almost ubiquitously in all human tissues examined, whereas the expression of PAP-2a was relatively variable, being extremely low in the placenta and thymus. In HeLa cells, the transcription of PAP-2a was not affected by different stimuli, whereas PAP-2b was induced (up to 3-fold) by epidermal growth factor. These findings indicate that despite structural similarities, the two PAP isozymes may play distinct functions through their different patterns of substrate utilization and transcriptional regulation.