The Cdc14 family of protein phosphatases is conserved within eukaryotes and antagonizes the action of cyclin-dependent kinases, thereby promoting mitotic exit and cytokinesis. We performed a detailed kinetic and mechanistic study of the Cdc14 phosphatases with both small molecule aryl phosphates and a physiological protein substrate hCdh1. We found that Cdc14 displays a strong preference for two-ringed aryl phosphates over smaller one-ringed or larger, multi-ringed substrates, a finding that may have important implications for inhibitor design. Results from both leaving group and pH dependence of the Cdc14-catalyzed reaction are consistent with a general acid-independent mechanism for substrates with leaving group pKa < 7 and a general acid-dependent mechanism for substrates with leaving group pKa > 7. The use of both low and high leaving group pKa substrates, in combination with steady-state and pre-steady-state kinetic techniques enabled the isolation and analysis of both the phosphoenzyme (E-P) formation and hydrolysis step. We established the requirement of general acid catalysis for E-P formation in reactions with high leaving group pKa substrates, and the presence of general base catalysis in E-P hydrolysis. Mutational study of invariant acidic residues in Cdc14 identified Asp253 as the general acid during E-P formation and the general base in E-P hydrolysis. We also identified several residues including Asp50, Asp129, Glu168, Glu171, and Asp177 in the Cdc14 active site cleft that are required for efficient dephosphorylation of hCdh1.