Phosphoprotein phosphatase which dephosphorylates 32P-labeled nucleolar protein substrates was found in nucleoli of Novikoff hepatoma ascites cells and normal rat liver. The activity was extracted in high yield from nucleoli with 0.01 M Bis/Tris (pH 7.0). Low ionic strength was also required for activity: the activity was only 50% of maximum in 0.075 M NaCl. Activity was affected differently by various divalent cations: MgCl2 had little effect: CaCl2, MnCl2 and CoCl2 above 4 mM inhibited the activity 30--60%; ZnCl2 above 2 mM completely destroyed the activity. EDTA had no effect, indicating that divalent cations are probably not required. The enzyme activity was enhanced 20% by 5--8 mM dithiothreitol and was inhibited 60% by 7--10 mM N-ethylmaleimide indicating a requirement for free sulfhydryl groups. The Km of the extracted enzyme for 32P-labeled nucleolar protein was 0.6 mg/ml. The phosphatase was capable of dephosporylating the major phosphorylated nucleolar proteins C23-24 and B23-24 and also histone H1. The enzyme was purified more than 200-fold on hydroxyapatite followed by DEAE-Sephadex, which resolved the activity into three major components. The activity of enzyme extracted from Novikoff hepatoma nucleoli was approximately 2.5 times greater than from normal liver nucleoli.

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