Mammalian lipid phosphate phosphatases (LPPs, or Type 2 phosphatidate phosphohydrolases) constitute a family of enzymes that belongs to a phosphatase superfamily. The LPPs dephosphorylate a variety of bioactive lipid phosphates including phosphatidate, lysophosphatidate, sphingosine 1-phosphate, and ceramide 1-phosphate. Mouse LPP-1 was stably expressed in rat2 fibroblasts to determine its structural and functional properties. Transduced cells showed increased dephosphorylation of exogenous lysophosphatidate. This result is compatible with mutational studies that show the active site of LPP-1 to be located on the external surface of the plasma membrane. Elevated LPP-1 activity attenuated the ability of lysophosphatidate to stimulate mitogen-activated protein kinase (ERK1 and 2) activities and DNA synthesis. It is concluded that one function of LPP-1 is to dephosphorylate exogenous lysophosphatidate, thereby attenuating cell signaling through endothelial cell differentiation gene (EDG) receptors.