Carboxypeptidase D (CPD) is a transmembrane protein that processes proteins in the trans-Golgi network (TGN). A 20-residue region within the cytoplasmic tail of CPD binds protein phosphatase 2A (PP2A). PP2A also binds to the cytoplasmic tails of other secretory pathway proteins: peptidylglycine-(amino)-amidating mono-oxygenase, the cation-independent mannose-6-phosphate receptor and TGN38. The CPD tail is phosphorylated on Thr residues in the AtT-20 cell line. The CPD tail can also be phosphorylated by purified protein kinase A, protein kinase C and casein kinase II. Both the in vitro and the in vivo phosphorylated CPD tail can be dephosphorylated by purified PP2A. The binding of CPD tail peptide to PP2A does not influence phosphatase activity. The rate of transport of CPD from the TGN to the cell surface of AtT-20 cells is decreased 45% by okadaic acid, a PP2A inhibitor. Microinjection of the CPD tail into AtT-20 cells inhibits the transition of CPD from endosomal compartments to the TGN. However, okadaic acid does not affect the rate of budding of CPD from the TGN into nascent vesicles or the rate of uptake from the cell surface into endosomal compartments. These results are consistent with the model that PP2A is involved in the trafficking of proteins between a TGN recycling loop and a cell-surface recycling loop, but is not involved in the individual recycling loops.