Two genes in Saccharomyces cerevisiae, LPP1 and DPP1, with homology to a mammalian phosphatidic acid (PA) phosphatase were identified and disrupted. Neither single nor combined deletions resulted in growth or secretion phenotypes. As observed previously (Toke, D. A., Bennett, W. L., Dillon, D. A., Wu, W.-I., Chen, X., Ostrander, D. B., Oshiro, J., Cremesti, A., Voelker, D. R., Fischl, A. S., and Carman, G. M. (1998) J. Biol. Chem. 273, 3278-3284; Toke, D. A., Bennett, W. L., Oshiro, J., Wu, W.-I., Voelker, D. R., and Carman, G. M. (1998) J. Biol. Chem. 273, 14331-14338), the disruption of DPP1 and LPP1 produced profound losses of Mg2+-independent PA phosphatase activity. The coincident attenuation of hydrolytic activity against diacylglycerol pyrophosphate prompted an examination of the effects of these disruptions on hydrolysis of isoprenoid pyrophosphates. Disruption of either LPP1 or DPP1 caused respective decreases of about 25 and 75% in Mg2+-independent hydrolysis of several isoprenoid phosphates by particulate fractions isolated from these cells. The particulate and cytosolic fractions from the double disruption (lpp1Delta dpp1Delta) showed essentially complete loss of Mg2+-independent hydrolytic activity toward dolichyl phosphate (dolichyl-P), dolichyl pyrophosphate (dolichyl-P-P), farnesyl pyrophosphate (farnesyl-P-P), and geranylgeranyl pyrophosphate (geranylgeranyl-P-P). However, a modest Mg2+-stimulated activity toward PA and dolichyl-P was retained in cytosol from lpp1Delta dpp1Delta cells. The action of Dpp1p on isoprenyl pyrophosphates was confirmed by characterization of the hydrolysis of geranylgeranyl-P-P by the purified protein. These results indicate that LPP1 and DPP1 account for most of the hydrolytic activities toward dolichyl-P-P, dolichyl-P, farnesyl-P-P, and geranylgeranyl-P-P but also suggest that yeast contain other enzymes capable of dephosphorylating these essential isoprenoid intermediates.