Ssu72 is an essential and highly conserved protein involved in mRNA transcription and 3'-end processing. The biochemical function of Ssu72 was so far unknown. We report here evidence that Ssu72 is a phosphatase that resembles protein tyrosine phosphatases (PTPases). First, recombinant Ssu72 cleaves the phosphotyrosine analogue p-nitrophenylphosphate, and this catalytic activity is impaired by PTPase-inhibiting agents. Second, the Ssu72 sequence contains the CX(5)R signature motif of PTPases; mutation of the catalytic cysteine in this motif abolishes Ssu72 activity in vitro and has been shown to confer lethality in vivo. Third, secondary structure prediction and site-directed mutagenesis predict that Ssu72 adopts the fold of PTPases of the low molecular weight family. Distinguishing features, such as a short "aspartate loop" at the active site, suggest however that Ssu72 is the founding member of a new phosphatase subfamily. The novel Ssu72 activity may regulate coupling events during mRNA biogenesis.