Soluble, monomeric simian virus 40 (SV40) small-t antigen (small-t) was purified from bacteria and assayed for its ability to form complexes with protein phosphatase 2A (PP2A) and to modify its catalytic activity. Different forms of purified PP2A, composed of combinations of regulatory subunits (A and B) with a common catalytic subunit (C), were used. The forms used included free A and C subunits and AC and ABC complexes. Small-t associated with both the free A subunit and the AC form of PP2A, resulting in a shift in mobility during nondenaturing polyacrylamide gel electrophoresis. Small-t did not interact with the free C subunit or the ABC form. These data demonstrate that the primary interaction is between small-t and the A subunit and that the B subunit of PP2A blocks interaction of small-t with the AC form. The effect of small-t on phosphatase activity was determined by using several exogenous substrates, including myosin light chains phosphorylated by myosin light-chain kinase, myelin basic protein phosphorylated by microtubule-associated protein 2 kinase/ERKl, and histone H1 phosphorylated by protein kinase C. With the exception of histone H1, small-t inhibited the dephosphorylation of these substrates by the AC complex. With histone Hl, a small stimulation of dephosphorylation by AC was observed. Small-t had no effect on the activities of free C or the ABC complex. A maximum of 50 to 75% inhibition was obtained, with half-maximal inhibition occurring at 10 to 20 nM small-t. The specific activity of the small-t/AC complex was similar to that of the ABC form of PP2A with myosin light chains or histone Hl as the substrate. These results suggested that small-t and the B subunit have similar qualitative and quantitative effects on PP2A enzyme activity. These data show that SV40 small-t antigen binds to purified PP2A in vitro, through interaction with the A subunit, and that this interaction inhibits enzyme activity.