The endogenous circadian clock is a principal factor modulating memory across species. Determining the processes through which the circadian clock modulates memory formation is a key issue in understanding and identifying mechanisms to improve memory. We used the marine mollusk Aplysia californica to investigate circadian modulation of intermediate-term memory (ITM) and the mechanisms through which the circadian clock phase specifically suppresses memory using the operant learning paradigm, learning that food is inedible. We found that ITM, a temporally and mechanistically distinct form of memory, is rhythmically expressed under light-dark and constant conditions when induced by either massed or spaced training. Strong circadian regulation of ITM occurs with memory exhibited only by animals trained during the early subjective day; no apparent memory is expressed when training occurs during the late subjective day or night. Given the necessity of multiple persistent kinase cascades for ITM, we investigated whether protein phosphatase activity affected circadian modulation. Inhibition of protein phosphatases 1 and 2A blocked ITM when animals were trained during the early (subjective) day while resulting in phase-specific memory rescue when animals were trained late in the subjective day and early night. In contrast, inhibition of calcineurin did not block ITM when animals were trained during the early day and permitted ITM when animals were trained during the late subjective day, early evening, and throughout the night. These results demonstrate that levels of protein phosphatase activity are critical regulators of ITM and one mechanism through which the circadian clock regulates memory formation.