The Drosophila extracellular signal-regulated kinase (DERK) mitogen-activated protein kinase (MAPK) is involved in the regulation of multiple differentiation and developmental processes. Tight control of MAPK activity is critical for normal cell behaviour. We identified a novel Drosophila MAPK phosphatase (DMKP) cDNA from the expressed-sequence-tag database and characterized it. Analysis of the nucleotide sequence revealed an open reading frame encoding the 203-amino acid protein, with a calculated molecular mass of 23 kDa, which has a high amino acid sequence similarity with 'VH1-like' dual-specific phosphatases at the broad region near the catalytic sites. The expression of DMKP mRNA occurs from the late larval stages to adulthood in Drosophila development. The recombinant DMKP protein produced in yeast retained its phosphatase activity. When expressed in Schneider cells, DMKP dose-dependently inhibited DERK and Drosophila c-Jun N-terminal kinase activities with high selectivity towards DERK. However, DMKP did not have any affect on Drosophila p38 activity. When DMKP was expressed in yeast, it down-regulated the fus1-lacZ trans-reporter gene of the pheromone MAPK pathway without any significant effect on the high-osmolarity-glycerol-response pathway.