Mitogenic stimulation of cells induces rapid and transient activation of MAP kinases. Here we repot-l that a growth factor-inducible gene, 3CH134, encodes a dual specificity phosphatase that dephosphorylates and inactivates p42 YAPK both in vitro and in vivo. In vitro, 3CH134 protein dephosphorylates both T183 and Y185 in~ 42”~~~. In serum-stimulated normal fibroblasts, the kinetics of inactivation of~ 42’~~~ coincides with the appearance of newly synthesized 3CH134 protein, and the protein synthesis inhibitor cycloheximide leads to persistent activation of MAP kinase. Expression of 3CH134 in COS cells leads to selective dephosphorylation of~ 42’~~~ from the spectrum of phosphotyrosyl proteins. 3CH134 blocks phosphorylation and activation of~ 42’~~~ mediated by serum, oncogenic Ras, or activated Raf, whereas the catalytically inactive mutant of the phosphatase, Cys-258-6er, augments MAP kinase phosphorylation under similar conditions. The mutant 3CH134 protein also forms a physical complex with the phosphorylated form of~ 42’““~~. These findings suggest that 3CH134 is a physiological MAP kinase phosphatase; we propose the name YKP-1 for this phosphatase.