The two-hybrid system was used to screen for binding proteins of type 1 protein phosphatase. Two plasmids were constructed, one containing the cDNA of the delta isoform of the type 1 catalytic subunit and the other containing a chicken gizzard cDNA library. Yeast (Y190) were transformed with the plasmids and screened for interacting species. 35 positive clones were categorized into 19 gene groups. Most of these were not identified. One clone, however, contained a sequence identical to the C-terminal portion of the chicken ribosomal protein L5 and corresponded to nucleotide residues 606-975. L5 was isolated from rat liver ribosomes as the L5.5 S RNA complex. This activated phosphatase activity of a myosin-bound phosphatase and the isolated type 1 catalytic subunit using phosphorylated myosin light chains and phosphorylase alpha as substrates. In addition, it was found that phosphatase sedimented with ribosomal subunits containing L5 but did not sediment with those deficient in L5. These data indicate that L5 binds to the catalytic subunit of the type 1 protein phosphatase and may act as a target molecule for phosphatase in ribosomal function or other cell mechanisms.