Posttranslational modification of proteins by kinases and phosphatases plays an important role in the regulation of cellular signaling in general and neurochemistry in particular. This also applies to vertebrate photoreceptors where phosphorylation of rhodopsin causes uncoupling from the signal transduction cascade. Functional activity of rhodopsin is restored after substitution of the bleached photopigment 11-cisretinal and by dephosphorylation of the opsin moiety. Phosphatases type-1 and type-2A have been identified in vertebrate retinae. Recently, we have shown by molecular cloning that two isozymes of protein phosphatase type-2C (PP2C, PPM) do exist in retinal tissue. In this report, we have purified PP2Calpha and PP2Cbeta from bovine retinae. Thirty to 40% of PP2C was recovered in the cytosolic fraction. Biochemical properties of native and heterologously expressed recombinant enzymes were similar. Enzymatic activity is strictly dependent on the presence of Mg2+. Addition of Ca2+ ions inhibits Mg2+-sustained activity. Antiserum raised against a C-terminal peptide of PP2Cbeta specifically labeled the outer segments of rod photoreceptor cells. PP2C protein levels were significantly reduced in RCS rats, which develop age-dependent photoreceptor degeneration comparable to the hereditary disease retinitis pigmentosa. Although the retinal substrate(s) remain to be identified, the results suggest that PP2C modulates cellular components of the phototransduction machinery.