A soluble polyphosphatase of Saccharomyces cerevisiae, purified to apparent homogeneity, is monomeric with a molecular mass of 40 kDa. It acts as an exoenzyme in a processive mode releasing orthophosphate residues from long polyphosphate chains until pyrophosphate is reached. Polyphosphates of all the lengths examined are used as substrates with a preference for those of about 250 residues. These are degraded with a kcat/Km near the limit for diffusion-controlled reactions. At 37 degrees C, the enzyme releases about 500 phosphate residues/s. It does not act on pyrophosphate, ATP, or the cyclic form of tripolyphosphate. For optimal activity the enzyme requires magnesium, manganese, or cobalt.