The proteins of the retinoblastoma family are potent inhibitors of cell cycle progression. It is well documented that their growth-inhibitory activity can be abolished by phosphorylation on serine and threonine residues by cyclin dependent kinases. In contrast, very little is known about the dephosphorylation of retinoblastoma-family proteins. We report here the isolation, by virtue of its ability to associate with p107, of a novel Protein Phosphatase 2A (PP2A) regulatory subunit, named PR59. PR59 shares sequence homology with a known regulatory subunit of PP2A, PR72, but differs from PR72 in its expression pattern and its functional properties. We show that PR59 co-immunoprecipitates with the PP2A catalytic subunit, indicating that PR59 is a genuine component of PP2A holo-enzymes. In vivo, PR59 associates specifically with p107, but not with pRb. Elevated expression of PR59 results in dephosphorylation of p107, but not of pRb, and inhibits cell proliferation by causing cells to accumulate in G1. These data support a model in which the distinct PP2A regulatory subunits act to target the PP2A catalytic subunit to specific substrates and suggest a role for PP2A in regulation of p107.