The serine/threonine protein phosphatase protein phosphatase 1 (PP1) is known to play an important role in learning and memory by mediating local and downstream aspects of synaptic signaling, but how PP1 activity is controlled in different forms of synaptic plasticity remains unknown. We find that synaptic N-methyl-D-aspartate (NMDA) receptor stimulation in neurons leads to activation of PP1 through a mechanism involving inhibitory phosphorylation at Thr320 by Cdk5. Synaptic stimulation led to proteasome-dependent degradation of the Cdk5 regulator p35, inactivation of Cdk5, and increased auto-dephosphorylation of Thr320 of PP1. We also found that neither inhibitor-1 nor calcineurin were involved in the control of PP1 activity in response to synaptic NMDA receptor stimulation. Rather, the PP1 regulatory protein, inhibitor-2, formed a complex with PP1 that was controlled by synaptic stimulation. Finally, we found that inhibitor-2 was critical for the induction of long-term depression in primary neurons. Our work fills a major gap regarding the regulation of PP1 in synaptic plasticity.