Lafora disease is a progressive myoclonus epilepsy with onset typically in the second decade of life and death within 10 years. Lafora bodies, deposits of abnormally branched, insoluble glycogen-like polymers, form in neurons, muscle, liver, and other tissues. Approximately half of the cases of Lafora disease result from mutations in the EPM2A gene, which encodes laforin, a member of the dual-specificity protein phosphatase family that additionally contains a glycogen binding domain. The molecular basis for the formation of Lafora bodies is completely unknown. Glycogen, a branched polymer of glucose, contains a small amount of covalently linked phosphate whose origin and function are obscure. We report here that recombinant laforin is able to release this phosphate in vitro, in a time-dependent reaction with an apparent K(m) for glycogen of 4.5 mg/ml. Mutations of laforin that disable the glycogen binding domain also eliminate its ability to dephosphorylate glycogen. We have also analyzed glycogen from a mouse model of Lafora disease, Epm2a(-/-) mice, which develop Lafora bodies in several tissues. Glycogen isolated from these mice had a 40% increase in the covalent phosphate content in liver and a 4-fold elevation in muscle. We propose that excessive phosphorylation of glycogen leads to aberrant branching and Lafora body formation. This study provides a molecular link between an observed biochemical property of laforin and the phenotype of a mouse model of Lafora disease. The results also have important implications for glycogen metabolism generally.