Ca2+/calmodulin-dependent protein kinase phosphatase (CaMKP/PPM1F) and its nuclear homolog CaMKP-N (PPM1E) are Ser/Thr protein phosphatases that belong to the PPM family. CaMKP-N is expressed in the brain and undergoes proteolytic processing to yield a C-terminally truncated form. The physiological significance of this processing, however, is not fully understood. Using a wheat-embryo cell-free protein expression system, we prepared human CaMKP-N (hCaMKP-N(WT)) and the truncated form, hCaMKP-N(1–559), to compare their enzymatic properties using a phosphopeptide substrate. The hCaMKP-N(1–559) exhibited a much higher V max value than the hCaMKP-N(WT) did, suggesting that the processing may be a regulatory mechanism to generate a more active species. The active form, hCaMKP-N(1–559), showed Mn2+ or Mg2+-dependent phosphatase activity with a strong preference for phospho-Thr residues and was severely inhibited by NaF, but not by okadaic acid, calyculin A, or 1-amino-8-naphthol-2,4-disulfonic acid, a specific inhibitor of CaMKP. It could bind to postsynaptic density and dephosphorylate the autophosphorylated Ca2+/calmodulin-dependent protein kinase II. Furthermore, it was inactivated by H2O2 treatment, and the inactivation was completely reversed by treatment with DTT, implying that this process is reversibly regulated by oxidation/reduction. The truncated CaMKP-N may play an important physiological role in neuronal cells.