M. tuberculosis harbors an essential phosphoserine phosphatase (MtSerB2, Rv3042c) that contains two small- molecule binding ACT-domains (Pfam 01842) at the N-terminus followed by the phosphoserine phosphatase (PSP) domain. We found that exogenously added MtSerB2 elicits microtubule rearrangements in THP-1 cells. Mutational analysis demonstrates that phosphatase activity is co-related to the elicited rearrangements, while addition of the ACT-domains alone elicits no rearrangements. The enzyme is dimeric, exhibits divalent metal- ion dependency, and is more specific for l- phosphoserine unlike other classical PSPases. Binding of a variety of amino acids to the ACT-domains influences MtSerB2 activity by either acting as activators/inhibitors/have no effects. Additionally, reduced activity of the PSP domain can be enhanced by equimolar addition of the ACT domains. Further, we identified that G18 and G108 of the respective ACT-domains are necessary for ligand-binding and their mutations to G18A and G108A abolish the binding of ligands like l- serine. A specific transition to higher order oligomers is observed upon the addition of l- serine at ∼0.8 molar ratio as supported by Isothermal calorimetry and Size exclusion chromatography experiments. Mutational analysis shows that the transition is dependent on binding of l- serine to the ACT-domains. Furthermore, the higher-order oligomeric form of MtSerB2 is inactive, suggesting that its formation is a mechanism for feedback control of enzyme activity. Inhibition studies involving over eight inhibitors, MtSerB2, and the PSP domain respectively, suggests that targeting the ACT-domains can be an effective strategy for the development of inhibitors.