A phosphatase related to the vaccinia virus VH1 phosphatase has been cloned from Saccharomyces cerevisiae. The yeast phosphatase is related to the Schizosaccharomyces pombe cdc25 gene product and to a protein encoded by a mammalian open reading frame known as 3CH134, which is an immediate early gene responding to serum stimulation. The phosphatase activity of the yeast gene product appears to be restricted to the hydrolysis of phosphotyrosine-containing substrates, whereas the vaccinia phosphatase hydrolyzes both phosphoserine- and phosphotyrosine-containing substrates. The mRNA encoding the yeast phosphatase is dramatically induced by nitrogen starvation. Inactivation of the yeast phosphatase gene results in a decrease in growth rate.