The novel Dictyostelium phosphatase MPL1 contains six leucine-rich repeats at the amino-terminal end and a phosphatase domain at the carboxyl end. Similarly architectured phosphatases exist among other protozoa, such as Entamoeba histolytica, Leishmania major, and Trypanosoma cruzi. MPL1 was strongly induced after 5 h of development; ablation by homologous recombination led to defective streaming and aggregation during development. In addition, cyclic AMP (cAMP)-pulsed mpl1(-) cells showed reduced random and directional motility. At the molecular level, mpl1(-) cells displayed higher prestimulus and persistent poststimulus ERK2 phosphorylation in response to cAMP stimulation. Consistent with their phenotype of persistent ERK2 phosphorylation, mpl1(-) cells also displayed an aberrant pattern of cAMP production, resembling that of the regA(-) cells. Reintroduction of a full-length MPL1 into mpl1(-) cells restored aggregation, ERK2 regulation, random and directional motility, and cAMP production similar to wild-type cells. We propose that MPL1 is a novel phosphatase essential for proper regulation of ERK2 phosphorylation and optimal motility during development.