The proto-oncogene Pim-1 encodes a serine-threonine kinase which is a downstream effector of cytokine signaling and can enhance cell cycle progression by altering the activity of several cell cycle regulators among them the G1 specific inhibitor p21^Waf, the phosphatase Cdc25A and the kinase C-TAK1. Here, we demonstrate by using biochemical assays that Pim-1 can interact with the phosphatase Cdc25C and is able to directly phosphorylate the N-terminal region of the protein. Cdc25C is functionally related to Cdc25A but acts specifically at the G2/M cell cycle transition point and can be inactivated by C-TAK1-mediated phosphorylation. Immuno-fluorescence experiments showed that Pim-1 and Cdc25C co-localize in the cytoplasm of both epithelial and myeloid cells. We find that phosphorylation by Pim-1 enhances the phosphatase activity of Cdc25C and in transfected cells that are arrested in G2/M by bleomycin, Pim-1 can enhance progression into G1. Therefore, we propose that Pim-1 activates Cdc25C by a direct phosphorylation and can thereby assume the function of a positive cell cycle regulator at the G2/M transition.