The use of protein phosphatase inhibitors has been instrumental in defining the intracellular roles of protein phosphatase 1 (PP1), PP2A and PP2B. Identification of the role of PP2C in vivo has been hampered, in part, by the unavailability of specific inhibitors. In order to facilitate the identification of novel and specific inhibitors of PP2C by random screening of compounds, and to further characterize this enzyme at the molecular level by site-directed mutagenesis and X-ray crystallography, we have expressed active recombinant human PP2C alpha (rPP2C alpha) in Escherichia coli. Biochemical characterization of rPP2C alpha showed that it could hydrolyse p-nitrophenyl phosphate (pNPP) although, in contrast with native PP2C, this was not stimulated by Mg2+. As with native PP2C, okadaic acid failed to inhibit rPP2C alpha, whereas 50 mM NaF dramatically inhibited its activity. An alignment of the amino acid sequence of AMP-activated protein kinase (AMPK) with those of other serine/threonine protein kinases around the regulatory phosphorylation site (subdomains VII-VIII) revealed a high degree of conservation. Phosphopeptides derived from this region of AMPK and containing the almost invariant threonine (Thr172 in AMPK) were found to be good substrates for rPP2C alpha. We also showed that rPP2C alpha can inactivate AMPK, but only in the presence of Mg2+. To define the regions of PP2C alpha important for catalytic activity, we expressed a number of truncated proteins based on the sequence and proposed domain structure of the PP2C alpha homologue from Paramecium tetraurelia. Deletion of 75 residues (9 kDa) from the C-terminus appeared to have little effect on the catalytic activity using pNPP, phosphopeptides or AMPK as substrates. This suggests that the residues important in catalysis lie elsewhere in the protein. A further deletion of the C-terminus led to a completely inactive and very poorly soluble protein.