Cell surface receptor membrane localization is strongly dependent on protein-protein interactions often involving regulation by phosphorylation/dephosphorylation of the intracellular domains of membrane proteins. The present study was carried out to identify metabotropic glutamate receptor (mGluR) 3 regulatory binding proteins. Using the yeast two-hybrid technique, we found that the 50-aa C-terminal cytoplasmic tail of mGluR3 interacts specifically with protein phosphatase 2Calpha (PP2Calpha). This interaction was confirmed by GST pull-down and coimmunoprecipitation assays. mGluR3 interacts with PP2Calpha, beta, gamma, and delta isoforms; however, among the mGluR family only mGluR3 interacted with PP2C. The minimal interacting domain of mGluR3 comprised residues 836-855. Alignment between mGluR3 and mGluR2, a closely related group II receptor, indicated that this domain is not conserved between the two receptors. The mGluR3 cytoplasmic C-terminal tail contains one phosphorylation site for protein kinase A (Ser-845), but the phosphatase that dephosphorylates this site has not been previously identified. We find that PP2C, but not PP1, PP2A, or PP2B, dephosphorylates the mGluR3 cytoplasmic tail in vitro. The dephosphorylated form of the mGluR3 cytoplasmic tail, but not the equivalent region of mGluR2, inhibited PP2C assayed by using [32P]casein as a substrate. However, phosphorylation of the mGluR3 cytoplasmic tail at Ser-845 inhibits the interaction with PP2C. These results indicate distinct functions for mGluR2 and mGluR3 and suggest a dynamic regulation of mGluR3 by PP2C.