The effect of glucose on hepatic fructose (Fru) 2,6-P2 in starved rats was investigated. When livers were perfused with high glucose (40 mM), hexose-P in the liver increased immediately reaching the maximum within in 2 min, but Fru 2,6-P2 after a lag period of 4 min increased linearly. The activation of Fru 6-P,2-kinase and inactivation of Fru 2,6-Pase also showed a similar lag period. Determination of the phosphate contents of the bifunctional enzyme after 10 min of glucose perfusion revealed that 90%of the enzyme was in the dephospho form while only 10& of the control liver enzyme was dephosphorylated. Comparison of crude extracts of liver perfused with either high glucose or normal glucose (5.6 mM) showed that high glucose livers contained 50% higher protein phosphatase activity, which dephosphorylated the bifunctional enzyme. Subcellular fractionation of the extract showed that activation of the protein phosphatase occurred in the cytosol. Desalting of the cytosolic fraction resulted in a 50& loss of the protein phosphatase activity. The low molecular weight activator in the cytosol was isolated, and by various chemical and enzymatic methods it was identified as xylulose 5-P. The activation of protein phosphatase by xylulose 5-P showed a highly sigmoidal saturation curve. The rate of formation of xylulose 5-P in the perfused liver showed a lag period of approximately 2 min, and after 4 min its concentration reached 10 microM, the minimum concentration necessary for the activation of the protein phosphatase. We conclude that the mechanism of glucose-induced Fru 2,6-P2 synthesis was not due to increased Fru 6-P as generally thought but occurred as a result of dephosphorylation of Fru 6-P,2-kinase:Fru 2,6-Pase. Moreover, the dephosphorylation was enhanced by increased xylulose 5-P, which activated a specific protein phosphatase. The results suggest a mechanism for coordinated regulation of glycolysis and the pentose shunt pathway that is mediated by xylulose 5-P.