We used the interaction trap, a yeast genetic selection for interacting proteins, to isolate human cyclin-dependent kinase interactor 1 (Cdi1). In yeast, Cdi1 interacts with cyclin-dependent kinases, including human Cdc2, Cdk2, and Cdk3, but not with Ckd4. In HeLa cells, Cdi1 is expressed at the G1 to S transition, and the protein forms stable complexes with Cdk2. Cdi1 bears weak sequence similarity to known tyrosine and dual specificity phosphatases. In vitro, Cdi1 removes phosphate from tyrosine residues in model substrates, but a mutant protein that bears a lesion in the putative active site cysteine does not. Overexpression of wild-type Cdi1 delays progression through the cell cycle in yeast and HeLa cells; delay is dependent on Cdi1 phosphatase activity. These experiments identify Cdi1 as a novel type of protein phosphatase that forms complexes with cyclin-dependent kinases.