The activity of protein phosphatase (PP)-2A and PP-1 decreased in the brains of Alzheimer's disease and inhibition of the phosphatases led to spatial memory deficit in rats. However, the molecular basis underlying memory impairment of the phosphatase inhibition is elusive. In the present study, we observed a selective inhibition of PP-2A and PP-1 with Calyculin A (CA) not only caused hyperphosphorylation of cytoskeletal proteins, but also impaired the transport of pEGFP-labeled neurofilament-M subunit in the axon-like processes of neuroblastoma N2a cells and resulted in accumulation of neurofilament in the cell bodies. To analyze the morphological alteration of the cells during inhibition of the phosphatases, we established a cell model showing steady outgrowth of axon-like cell processes and employed a stereological system to analyze the retraction of the processes. We found CA treatment inhibited outgrowth of the cell processes and prolonged treatment with CA caused retraction of the processes and meanwhile, the early neurodegenerative varicosities were also obvious in the CA-treated cells. We conclude suppression of PP-2A and PP-1 by CA not only damages intracellular transport but also leads to cell degeneration, which may serve as the functional and structural elements for the memory deficits induced by suppression of the phosphatases.