Protein phosphatase 1 (PP1) is a major serine/threonine phosphatase that controls gene expression and cell cycle progression. Here we describe the characterization of a novel inhibitory molecule for PP1, human inhibitor-5 of protein phosphatase 1 (IPP5). We find that IPP5, containing the PP1 inhibitory subunits, specifically interacts with the PP1 catalytic subunit and inhibits PP1 phosphatase activity. Furthermore, the mutation of Thr-40 within the inhibitory subunit of IPP5 into Ala eliminates the phosphorylation of IPP5 by protein kinase A and its inhibitor activity to PP1, whereas the mutation of Thr-40 within a truncated form of IPP5 into Asp can serve as a dominant active form of IPP5 in inhibiting PP1 activity. In IPP5-negative SW480 and IPP5-highly positive SW620 human colon cancer cells, we find that overexpression of IPP5 promotes the growth and accelerates the G(1)-S transition of SW480 cells in a Thr-40-dependent manner, which could be reversed by downregulation of the PP1 expression. Moreover, silencing of IPP5 inhibits the growth of SW620 cells both in vitro and in nude mice possibly by inducing G(0)/G(1) arrest but not by promoting apoptosis. According to its role in the promotion of cell cycle progression and cell growth, IPP5 up-regulates the expression of cyclin E and the phosphorylated form of retinoblastoma protein. Our findings suggest that IPP5, by acting as an inhibitory molecule for PP1, can promote tumor cell growth and cell cycle progression, and may be a promising target in cancer therapeutics in IPP5-highly expressing tumor cells.