Post-translational modifications such as phosphorylation provide versatile context-specific strategies for modulating transcription factor activity. In the prevailing view of this process, modifying enzymes indirectly influence gene expression by shuttling to and from the nucleus where they alter the activity of their target transcription factors. However, a new paradigm has recently been suggested from studies of Eyes absent (EYA), a member of a conserved network of transcriptional regulators implicated in the development of numerous tissues and organs including the eye, ear, muscle and kidney. These findings indicate that EYA operates both as a transcriptional coactivator and as the prototype of a novel class of protein tyrosine phosphatases. The regulatory potential of such a bifunctional transcription factor is enormous and suggests a new layer of dynamic regulation in which transcription factors themselves might provide intrinsic enzymatic activities to fine-tune nuclear output.