Diacylglycerol pyrophosphate (DGPP) phosphatase is a novel membrane-associated enzyme that catalyzes the dephosphorylation of the beta phosphate of DGPP to yield phosphatidate and Pi. DGPP phosphatase was purified 33,333-fold from Saccharomyces cerevisiae by a procedure that included Triton X-100 solubilization of microsomal membranes followed by chromatography with DE53, Affi-Gel Blue, hydroxylapatite, and Mono Q. The procedure resulted in the isolation of an apparent homogeneous protein with a subunit molecular mass of 34 kDa. DGPP phosphatase activity was associated with the 34-kDa protein. DGPP phosphatase had a broad pH optimum between 6.0 and 8.5 and was dependent on Triton X-100 for maximum activity. The enzyme was inhibited by divalent cations, NaF, and pyrophosphate and was relatively insensitive to thioreactive agents. The turnover number (molecular activity) for the enzyme was 5.8 x 10(3) min-1 at pH 6.5 and 30 degrees C. DGPP phosphatase exhibited typical saturation kinetics with respect to DGPP (Km = 0.55 mol %). The Km value for DGPP was 3-fold greater than its cellular concentration (0.18 mol %). DGPP phosphatase also catalyzed the dephosphorylation of phosphatidate, but this dephosphorylation was subsequent to the dephosphorylation of the beta phosphate of DGPP. The dependence of activity on phosphatidate (Km = 2.2 mol %) was cooperative (Hill number = 2.0). DGPP was the preferred substrate for the enzyme with a specificity constant (Vmax/Km) 10-fold greater than that for phosphatidate. In addition, DGPP potently inhibited (Ki = 0.35 mol %) the dephosphorylation of phosphatidate by a competitive mechanism whereas phosphatidate did not inhibit the dephosphorylation of DGPP. DGPP was neither a substrate nor an inhibitor of pure phosphatidate phosphatase from S. cerevisiae. DGPP was synthesized from phosphatidate via the phosphatidate kinase reaction.