The PPM phosphatases require millimolar concentrations of Mg²⁺ or Mn²⁺ to activate phosphatase activity in vitro. The human phosphatases PP2Cα (PPM1A) and Wip1 (PPM1D) differ in their physiological function, substrate specificity, and apparent metal affinity. A crystallographic structure of PP2Cα shows only two metal ions in the active site. However, recent structural studies of several bacterial PP2C phosphatases have indicated three metal ions in the active site. Two residues that coordinate the third metal ion are highly conserved, suggesting that human PP2C phosphatases may also bind a third ion. Here, isothermal titration calorimetry analysis of Mg²⁺ binding to PP2Cα distinguished binding of two ions to high affinity sites from the binding of a third ion with a millimolar affinity, similar to the apparent metal affinity required for catalytic activity. Mutational analysis indicated that Asp239 and either Asp146 or Asp243 was required for low-affinity binding of Mg²⁺, but that both Asp146 and Asp239 were required for catalysis. Phosphatase activity assays in the presence of MgCl₂, MnCl₂, or mixtures of the two, demonstrate high phosphatase activity toward a phosphopeptide substrate when Mg²⁺ was bound to the low-affinity site, whether Mg²⁺ or Mn²⁺ ions were bound to the high affinity sites. Mutation of the corresponding putative third metal ion-coordinating residues of Wip1 affected catalytic activity similarly both in vitro and in human cells. These results suggest that phosphatase activity toward phosphopeptide substrates by PP2Cα and Wip1 requires the binding of a Mg²⁺ ion to the low-affinity site.