Signals from several receptor tyrosine kinases are transduced by activation of the Ras family of GTP-binding proteins. Activation of Ras initiates a kinase cascade that culminates in activation of the mitogen-activated protein kinases (MAPKs). The MAPKs include the c-jun NH(2)-terminal protein kinases (JNKs) and extracellular signal-regulated kinases (ERKs), both of which phosphorylate Elk-1/TCF, a factor that activates transcription of the c-fos gene. In this report, we identify a novel 19 kDa gene product as a negative regulator of signaling through the ERK1/2 pathway. While these studies were in progress, the human homologue of this gene was characterized as diphosphoinositol polyphosphate phosphohydrolase (DIPP1) [EMBO J. 17 (1998) 6599], a phosphohydrolase that converts diphosphate groups on diphosphoinositol polyphosphates to monophosphates. Ectopic expression of murine DIPP1 (muDIPP1) blocked activation of the c-fos promoter by the ERK1/2 pathway. Inhibition of signal transduction through the ERK1/2 pathway by muDIPP1 occurs at or downstream from activation of MEK. In vitro kinase studies suggest that muDIPP1 is not a direct inhibitor of MEK or ERK activity, although, ectopic expression at near physiological levels results in attenuation of ERK phosphorylation in vivo. Interestingly, a site mutant of muDIPP1 lacking phosphohydrolase activity blocked signaling through the ERK1/2 pathway with greater efficiency than wild-type muDIPP1. This result suggests that inhibition of signaling through the ERK1/2 pathway is a distinct function of muDIPP1 that is not dependent on, but may be regulated by, its activity as a phosphohydrolase.