We have isolated two Arabidopsis thaliana genes, AtGppl and AtGpp2, showing homology with the yeast low molecular weight phosphatases GPP1 and GPP2, which have a high specificity for DL-glycerol-3-phosphate, and moreover homology with DOG1 and DOG2 that dephosphorylate 2-deoxyglucose-6-phosphate. Using a comparative genomic approach, the corresponding genes were identified as conceptual translated haloacid dehalogenase-like hydrolase proteins. AtGppl (gi 18416631) and AtGpp2 (gi 18423981), encode proteins that share 95% identity, with a predicted Mw of 33 and 27 kDa and a pI of 7.8 and 5.6, respectively. Both isoforms have a high specificity for DL-glycerol-3-phosphate, pH optima at 7.0, and Km in the range of 3.5-5.2 mM. AtGppl and AtGpp2 are expressed throughout development in all plant organs, most strongly in siliqua, and expression is not affected by osmotic, ionic or oxidative stress. A putative chloroplast transit peptide cTP-containing sequence is appended to the AtGppl N-terminus while AtGpp2, devoid of this tail, is predicted to be in the extraplastidial cytosol; this compartmenting was further confirmed by subcellular fractionation. An immunohystochemical localization study, using anti-AtGpp2 antibodies, indicates that the AtGpp proteins are mainly restricted to the meristem of immature flower and vascular elements of the root, shoot, leave, siliqua and developing embryo. Considerable immunoreaction was observed in the cytoplasm as well as in plastid compartments of distinct cells types from different heterotrophic Arabidopsis tissues, and particularly localised within phloem companion cells. Transgenic Arabidopsis plants, with gain of AtGpp2 function, show altered phosphatase activity rates and improved tolerance to salt, osmotic and oxidative stress.