The Pam/Highwire/RPM-1 (PHR) proteins are key regulators of neuronal development that function in axon extension and guidance, termination of axon outgrowth, and synapse formation. Outside of development, the PHR proteins also regulate axon regeneration and Wallerian degeneration. The PHR proteins function in part by acting as ubiquitin ligases that degrade the Dual Leucine zipper-bearing Kinase (DLK). Here, we show that the Caenorhabditis elegans PHR protein, Regulator of Presynaptic Morphology 1 (RPM-1), also utilizes a phosphatase-based mechanism to regulate DLK-1. Using mass spectrometry, we identified Protein Phosphatase Magnesium/Manganese dependent 2 (PPM-2) as a novel RPM-1 binding protein. Genetic, transgenic, and biochemical studies indicated that PPM-2 functions coordinately with the ubiquitin ligase activity of RPM-1 and the F-box protein FSN-1 to negatively regulate DLK-1. PPM-2 acts on S874 of DLK-1, a residue implicated in regulation of DLK-1 binding to a short, inhibitory isoform of DLK-1 (DLK-1S). Our study demonstrates that PHR proteins function through both phosphatase and ubiquitin ligase mechanisms to inhibit DLK. Thus, PHR proteins are potentially more accurate and sensitive regulators of DLK than originally thought. Our results also highlight an important and expanding role for the PP2C phosphatase family in neuronal development.