Serine/threonine phosphatases such as PP1, PP2A, and PP2B are well known to regulate the transition phase of the cell cycle. However, the function of PP2Cgamma in cell cycle progression is still unclear. In the present study, we report the characterization of PP2Cgamma in mammalian cells during the cell cycle. After release of synchronized cells from thymidine block, over-expression of PP2Cgamma led to accumulation in the S phase. The amount of endogenous p21(WAF1/CIP1) protein was markedly reduced by the expression of PP2Cgamma. The degradation of p21(WAF1/CIP1) induced by PP2Cgamma was mediated in a proteasome-dependent manner. In addition, the phosphatase activity of PP2Cgamma was capable of repressing the level of p21(WAF1/CIP1) protein. Phosphorylation of Rb was also reduced in cells expressing PP2Cgamma. Taken together, these results indicate that PP2Cgamma-induced S phase accumulation may be associated with proteasome-directed p21(WAF1/CIP1) degradation.