Signal transduction involves protein phosphorylation and dephosphorylation. To produce both substantial and transient changes requires coordinated and reciprocal regulation of kinases and phosphatases. One mechanism to accomplish this is phosphorylation, and there are now reports of phosphorylation of all the major types of protein Ser/Thr phosphatases. Phosphorylation of type-1 and type-2A phosphatases occurs within characteristic C-terminal sequences and results in the loss of phosphatase activity. The phosphatases catalyse intramolecular dephosphorylation, with a restoration of activity. This property probably accounts for the apparent constitutive activity of phosphatases in cell and tissue extracts. Phosphorylation of phosphatases is a way to flick the activity off and on in cells during the growth cycle and in response to stimuli.