The molecular architectures of the catalytic core of protein phosphatase 1 (PP1) and protein phosphatase 2B (PP2B) are similar, and both contain a beta12-beta13 loop that consists of non-conserved residues. A truncation mutant containing the PP2B catalytic domain has previously been constructed in our laboratory, and designated CNAa. In this study, the PP1 catalytic subunit (PP1c) and CNAa, as well as mutants with the corresponding loops exchanged, were investigated using multiple substrates. Deletion of the beta12-beta13 loop from Y272 to A279 of PP1c or from Y311 to K318 of CNAa resulted in inactive proteins. Loop exchange generated chimeric mutants called PP1-CNAa-loop and CNAa-PP1-loop. The activities and kinetic parameters of the two chimeric mutants were altered in the direction of the enzyme from which its loop was derived. The activity of PP1c or CNAa-PP1-loop was similar whether preincubated with Mn(2+) or not, while CNAa and PP1-CNAa-loop can acquire enhanced activation if preincubated with Mn(2+) for longer periods of time. Intrinsic fluorescence spectra revealed that the three-dimensional structure was altered as a result of exchanging the loops of PP1c and CNAa. In conclusion, the beta12-beta13 loop is one of the key regulatory elements in the catalytic domain for the activity and properties of PP1c and CNAa.