DARPP-32 (dopamine- and cAMP-regulated phosphoprotein, Mr=32000) is highly expressed in striatonigral neurons in which its phosphorylation is regulated by several neurotransmitters including dopamine and glutamate. DARPP-32 becomes a potent inhibitor of protein phosphatase 1 when it is phosphorylated on Thr-34 by cAMP- or cGMP-dependent protein kinases. DARPP-32 is also phosphorylated on Ser-137 by protein kinase CK1 (CK1), in vitro and in vivo. This phosphorylation has an important regulatory role since it inhibits the dephosphorylation of Thr-34 by calcineurin in vitro and in striatonigral neurons. Here, we show that DARPP-32 phosphorylated by CK1 is a substrate in vitro for protein phosphatases 2A and 2C, but not protein phosphatase 1 or calcineurin. However, in substantia nigra slices, dephosphorylation of Ser-137 was markedly sensitive to decreased temperature, and not detectably affected by the presence of okadaic acid under conditions in which dephosphorylation of Thr-34 by protein phosphatase 2A was inhibited. These results suggest that, in neurons, phospho-Ser-137-DARPP-32 is dephosphorylated by protein phosphatase 2C, but not 2A. Thus, DARPP-32 appears to be a component of a regulatory cascade of phosphatases in which dephosphorylation of Ser-136 by protein phosphatase 2C facilitates dephosphorylation of Thr-34 by calcineurin, removing the cyclic nucleotide-induced inhibition of protein phosphatase 1.