MKP-2 is a member of the mitogen-activated protein (MAP) kinase phosphatase family which has been suggested to play an important role in the feedback control of MAP kinase-mediated gene expression. Although MKP-2 preferentially inactivates extracellular signal-regulated kinase (ERK) and c-Jun NH(2)-terminal kinase (JNK) MAP kinase subfamilies, the mechanisms underlying its own regulation remain unclear. In this report, we have examined the MKP-2 interaction with and catalytic activation by distinct MAP kinase subfamilies. We found that the catalytic activity of MKP-2 was enhanced dramatically by ERK and JNK but was affected only minimally by p38. By contrast, p38 and ERK bound MKP-2 with comparably strong affinities, whereas JNK and MKP-2 interacted very weakly. Through site-directed mutagenesis, we defined the ERK/p38-binding site as a cluster of arginine residues in the NH(2)-terminal domain of MKP-2. Mutation of the basic motif abrogated its interaction with both ERK and p38 and severely compromised the catalytic activation of MKP-2 by these kinases. Unexpectedly, such mutations had little effect on JNK-triggered catalytic activation. Both in vitro and in vivo, wild type MKP-2 effectively inactivated ERK2 whereas MKP-2 mutants incapable of binding to ERK/p38 did not. Finally, in addition to its role as a docking site for ERK and p38, the MKP-2 basic motif plays a role in regulating its nuclear localization. Our studies provided a mechanistic explanation for the substrate preference of MKP-2 and suggest that catalytic activation of MKP-2 upon binding to its substrates is crucial for its function.