Metal-dependent protein phosphatases (PPM) are evolutionarily unrelated to other serine/threonine protein phosphatases and are characterized by their requirement for supplementation with millimolar concentrations of Mg 2+ or Mn 2+ ions for activity in vitro. The crystal structure of human PPM1A (also known as PP2Cα), the first PPM structure determined, displays two tightly bound Mn 2+ ions in the active site and a small subdomain, termed the Flap, located adjacent to the active site. Some recent crystal structures of bacterial or plant PPM phosphatases have disclosed two tightly bound metal ions and an additional, third metal ion in the active site. Here, the crystal structure of the catalytic domain of human PPM1A, PPM1A cat , complexed with a cyclic phosphopeptide, c(MpSIpYVA), a cyclized variant of the activation loop of p38 MAPK (a physiological substrate of PPM1A), revealed three metal ions in the active site. The PPM1A cat D146E-c(MpSIpYVA) complex confirmed the presence of the anticipated third metal ion in the active site of metazoan PPM phosphatases. Biophysical and computational methods suggested that complex formation results in a slightly more compact solution conformation through reduced conformational flexibility of the Flap subdomain. We also observed that the position of the substrate in the active site allows solvent access to the labile third metal-binding site. Enzyme kinetics of PPM1A cat toward a phosphopeptide substrate supported a randomorder, bi-substrate mechanism, with substantial interaction between the bound substrate and the labile metal ion. This work illuminates the structural and thermodynamic basis of an innate mechanism regulating the activity of PPM phosphatases.Reversible protein phosphorylation signaling pathways are shaped by opposing actions of protein kinases and phosphatases. These pathways regulate the response of cells and organisms to changing environmental and physiological circumstances; dysregulation of these pathways underlies many human diseases. Although phosphorylated protein residues are dominated by phosphoserine (pSer) Trapped PPM1A-phosphopeptide complex 2 of phosphatases involved in reversing the pSer/pThr and pTyr modifications are more evenly divided (1-3). Analysis of global dynamics of pSer/pThr and pTyr-based signaling suggests distinct patterns of regulation (4). The phosphoprotein phosphatases (PPP), with 13 members, and the metal-dependent phosphatases (PPM), with 18 members, provide most of the serine/threonine protein phosphatase activity in human cells (5,6).The activity, substrate specificity, and subcellular localization of PPP phosphatases are regulated primarily by binding of regulatory or inhibitor subunits, of which over 100 have been identified in human cells (7,8). PPM phosphatases generally are monomeric, but regulation of their activity remains incompletely understood (9-11). The evolutionarily distinct PPP and PPM phosphatases both feature tightly-bound bi-metal clusters in their active sites, but only the PPM phosphatases req...