Caulibugulones are novel but poorly characterized cytotoxic isoquinoline quinones and iminoquinones identified in extracts from the marine bryozoan Caulibugula intermis. We now report that the caulibugulones are selective in vitro inhibitors of the Cdc25 family of cell cycle-controlling protein phosphatases compared with either human vaccinia H1-related phosphatase (VHR) or tyrosine phosphatase 1B (PTP1B). The in vitro inhibition of Cdc25B by caulibugulone A was irreversible and attenuated by reducing agents or catalase, consistent with direct oxidation of the enzyme by reactive oxygen species. Mechanistically, caulibugulone A directly inhibited cellular Cdc25B activity, generated intracellular reactive oxygen species and arrested cells in both G1 and G2/M phases of the cell cycle. Caulibugulone A also caused the selective degradation of Cdc25A protein by a process that was independent of reactive oxygen species production, proteasome activity, and the Chk1 signaling pathway. Instead, caulibugulone A stimulated the phosphorylation and subsequent activation of p38 stress kinase, leading to Cdc25A degradation. Thus, caulibugulone inhibition of cellular Cdc25A and B phosphatases occurred through at least two different mechanisms, leading to pronounced cell cycle arrest.