We report the molecular cloning in Rattus norvegicus of a novel mammalian enzyme (RnPIP), which shows both 3'-phosphoadenosine 5'-phosphate (PAP) phosphatase and inositol-polyphosphate 1-phosphatase activities. This enzyme is the first PAP phosphatase characterized at the molecular level in mammals, and it represents the first member of a novel family of dual specificity enzymes. The phosphatase activity is strictly dependent on Mg2+, and it is inhibited by Ca2+ and Li+ ions. Lithium chloride inhibits the hydrolysis of both PAP and inositol-1,4-bisphosphate at submillimolar concentration; therefore, it is possible that the inhibition of the human homologue of RnPIP by lithium ions is related to the pharmacological action of lithium. We propose that the PAP phosphatase activity of RnPIP is crucial for the function of enzymes sensitive to inhibition by PAP, such as sulfotransferase and RNA processing enzymes. Finally, an unexpected connection between PAP and inositol-1,4-bisphosphate metabolism emerges from this work.