The Pyst1 and Pyst2 mRNAs encode closely related proteins, which are novel members of a family of dual-specificity MAP kinase phosphatases typified by CL100/MKP-1. Pyst1 is expressed constitutively in human skin fibroblasts and, in contrast to other members of this family of enzymes, its mRNA is not inducible by either stress or mitogens. Furthermore, unlike the nuclear CL100 protein, Pyst1 is localized in the cytoplasm of transfected Cos-1 cells. Like CL100/ MKP-1, Pyst1 dephosphorylates and inactivates MAP kinase in vitro and in vivo. In addition, Pyst1 is able to form a physical complex with endogenous MAP kinase in Cos-1 cells. However, unlike CL100, Pyst1 displays very low activity towards the stress-activated protein kinases (SAPKs) or RK/p38 in vitro, indicating that these kinases are not physiological substrates for Pyst1. This specificity is underlined by the inability of Pyst1 to block either the stress-mediated activation of the JNK-1 SAP kinase or RK/p38 in vivo, or to inhibit nuclear signalling events mediated by the SAP kinases in response to UV radiation. Our results provide the first evidence that the members of the MAP kinase family of enzymes are differentially regulated by dual-specificity phosphatases and also indicate that the MAP kinases may be regulated by different members of this family of enzymes depending on their subcellular location.