The characterization of the multiple inositol polyphosphate phosphatase (MIPP) is fundamental to our understanding of how cells control the signalling activities of 'higher' inositol polyphosphates. We now describe our isolation of a 2.3 kb cDNA clone of a rat hepatic form of MIPP. The predicted amino acid sequence of MIPP includes an 18 amino acid region that aligned with approximately 60% identity with the catalytic domain of a fungal inositol hexakisphosphate phosphatase (phytase A); the similarity encompassed conservation of the RHGXRXP signature of the histidine acid phosphatase family. A histidine-tagged, truncated form of MIPP was expressed in Escherichia coli and the enzymic specificity of the recombinant protein was characterized: Ins(1,3,4,5,6)P5 was hydrolysed, first to Ins(1,4,5,6)P4 and then to Ins(1,4,5)P3, by consecutive 3- and 6-phosphatase activities. Inositol hexakisphosphate was catabolized without specificity towards a particular phosphate group, but in contrast, MIPP only removed the beta-phosphate from the 5-diphosphate group of diphosphoinositol pentakisphosphate. These data, which are consistent with the substrate specificities of native (but not homogeneous) MIPP isolated from rat liver, provide the first demonstration that a single enzyme is responsible for this diverse range of specific catalytic activities. A 2.5 kb transcript of MIPP mRNA was present in all rat tissues that were examined, but was most highly expressed in kidney and liver. The predicted C-terminus of MIPP is comprised of the tetrapeptide SDEL, which is considered a signal for retaining soluble proteins in the lumen of the endoplasmic reticulum; the presence of this sequence provides a molecular explanation for our earlier biochemical demonstration that the endoplasmic reticulum contains substantial MIPP activity [Ali, Craxton and Shears (1993) J. Biol. Chem. 268, 6161-6167].