The molecular oscillator that drives circadian rhythmicity in mammals obtains its near 24-h periodicity from posttranslational regulation of clock proteins. Activity of the major clock kinase casein kinase I (CKI) epsilon is regulated by inhibitory autophosphorylation. Here we show that protein phosphatase (PP) 5 regulates the kinase activity of CKIepsilon. We demonstrate that cryptochrome regulates clock protein phosphorylation by modulating the effect of PP5 on CKIepsilon. Like CKIepsilon, PP5 is expressed both in the master circadian clock in the suprachiasmatic nuclei and in peripheral tissues independent of the clock. Expression of a dominant-negative PP5 mutant reduces PER phosphorylation by CKIepsilon in vivo, and down-regulation of PP5 significantly reduces the amplitude of circadian cycling in cultured human fibroblasts. Collectively, these findings indicate that PP5, CKIepsilon, and cryptochrome dynamically regulate the mammalian circadian clock.