Lafora disease (LD) is the only progressive myoclonus epilepsy with polyglucosan bodies. Among conditions with polyglucosan bodies, LD is unique for the subcellular location of its polyglucosans in neuronal perikarya and dendrites and not in axons. Here we report that the protein encoded by the EPM2A gene, which is mutated in LD, localizes at the plasma membrane and the endoplasmic reticulum and that it is a functional protein tyrosine phosphatase. The significance of these findings in the epilepsy of LD and in the origin and characteristic subcellular location of Lafora bodies is discussed.