Dual-specificity protein phosphatases (DSPs) play roles in the regulation of mitogenic signal transduction for extracellular stimulation and the cell cycle. In the present study, we identified a novel DSP, termed TMDP (testis- and skeletal-muscle-specific DSP). Nucleotide sequence analysis of TMDP cDNA indicated that the open reading frame of 597 bp encodes a protein of 198 amino acid residues with a predicted molecular mass of 22.5 kDa. The deduced amino acid sequence contains a motif for a conserved catalytic domain of DSPs and shows highest similarity to human Vaccinia HI-related phosphatase (45.5% identity) but low homology to the mitogen-activated protein kinase phosphatase and CDC25 subfamilies of DSPs. Recombinant TMDP protein exhibited intrinsic phosphatase activity towards both phospho-seryl/threonyl and -tyrosyl residues of myelin basic protein, with similar specific activities in vitro. Northern-blot analysis revealed that TMDP is most abundantly expressed in the testis. The expression in the testis is characterized as follows: (i) TMDP mRNA first appeared 3 weeks after birth, corresponding to the time that meiosis begins; (ii) TMDP mRNA was abundant in fractionated spermatocytes and round spermatids; and (iii) hybridization in situ showed that the TMDP mRNA is localized in spermatocytes and/or spermatids in seminiferous tubules. These data demonstrate that TMDP is a novel DSP abundantly expressed in the testis and suggest that TMDP may be involved in the regulation of meiosis and/or differentiation of testicular germ cells during spermatogenesis.