Several lines of evidence indicate that serine/threonine protein phosphatases may act as negative regulators of cellular growth. For example, treatment of cells with the tumor-promoter okadaic acid, an inhibitor of certain types of these phosphatases, resulted in the increased expression of several proto-oncogenes, indicating a negative role of the respective phosphatases in gene regulation. However, it was puzzling to find that okadaic acid-treated cells, even in the presence of highly expressed proto-oncogenes, did not proliferate, but were arrested at certain points of the cell cycle. To further analyze this discrepancy, we investigated the involvement of protein phosphatases in the control of other cell cycle regulatory genes, such as cdc2 which encodes an essential cell cycle regulatory kinase. We found that cdc2 gene expression was blocked by okadaic acid, but stimulated by protein phosphatase 2A. Protein phosphatase 2A is shown to be a positive regulator of cdc2 gene activity and to be required for cdc2 expression. Thus, our findings identify protein phosphatase 2A as a positive regulator of a major cell cycle regulatory gene and therefore suggest a stimulatory role of this enzyme in this aspect of cellular growth control.