Expression of the recombination activating genes, RAG-1 and RAG-2, in lymphocytes, has been shown to depend on second messenger systems. An increase in intracellular cAMP upon stimulation with caffeine increases RAG expression while activation of protein kinase C (PKC) with phorbol myristate acetate (PMA) results in decreased RAG expression. The stringent regulation of recombination appears to be partially dependent on protein kinase activities which, alone, are not likely to be sufficient to regulate recombinase activity. We provide evidence implicating a role for serine/threonine phosphatases in the signal transduction pathway which regulates RAG gene expression and consequently the recombination process in lymphocytes. The cell permeable tumor promoter, calyculin-A (CLA), which is a potent inhibitor of the type 1 and 2A serine/threonine protein phosphatases (PP1 and PP2A, respectively), was shown to upregulate the expression of RAG-1 and RAG-2 in pre-B as well as mature B- and T-lymphocyte cell lines. Although agents such as caffeine known to increase intracellular cAMP levels induce RAG expression, synergy between CLA and caffeine was not detected in pre-B cells. An in vivo assessment of recombination activity after transfection of pre-B cells with an extrachromosomal recombination vector revealed a moderate increase in recombinase activity which paralleled RAG expression after CLA stimulation. Although increased cAMP levels in pre-B cells has been associated with upregulation of RAG expression we found no such upregulation in a surface immunoglobulin M positive (sIgM+) cell line, WEHI-231, and a T cell receptor positive (TCR+) murine cell line, EL-4. Moreover, in these mature lymphocyte cell lines there was no evidence of synergy in the regulation of RAG-1 and RAG-2 mRNA upon stimulation with CLA and caffeine. These results suggest novel intracellular mechanisms for the upregulation of RAG gene expression and confirm a role for type 1 and 2A phosphatases in the control of RAG gene expression and recombinase activity in lymphocyte cell lines.