The possible involvement of protein phosphatase in ceramide-mediated neural cell differentiation was investigated. Neuroblastoma Neuro2a cell differentiation induced by retinoic acid, or conditions causing an increase in cellular ceramide, was significantly inhibited by the serine/threonine phosphatase inhibitor okadaic acid, at concentrations as low as 2.5 nM. A crude cytosolic preparation from Neuro2a cells was found to have a cation-independent protein phosphatase activity that was stimulated by ceramide in a dose-dependent manner. Short- and long-chain ceramides, but not sphingosine and related dihydro-derivatives, were active. Ceramide-activated protein phosphatase activity from Neuro2a cells was inhibited by 5 nM okadaic acid. The data indicate that a type 2A protein phosphatase is involved in ceramide-mediated differentiation of Neuro2a cells.