The important role of the serine/threonine protein phosphatase 2A (PP2A) in various cellular processes requires a precise and dynamic regulation of PP2A activity, localization, and substrate specificity. The regulation of the function of PP2A involves the reversible methylation of the COOH group of the C-terminal leucine of the catalytic subunit, which, in turn, controls the enzyme's heteromultimeric composition and confers different protein recognition and substrate specificity. We have determined the structure of PPM1, the yeast methyltransferase responsible for methylation of PP2A. The structure of PPM1 reveals a common S-adenosyl-L-methionine-dependent methyltransferase fold, with several insertions conferring the specific function and substrate recognition. The complexes with the S-adenosyl-L-methionine methyl donor and the S-adenosyl-L-homocysteine product and inhibitor unambiguously revealed the co-substrate binding site and provided a convincing hypothesis for the PP2A C-terminal peptide binding site. The structure of PPM1 in a second crystal form provides clues to the dynamic nature of the PPM1/ PP2A interaction.The regulation of the serine/threonine protein phosphatase 2A (PP2A), 1 one of the most abundant protein phosphatases in eukaryotic cells, is intimately linked to the ability to modulate the composition of this multimeric enzyme (1). Although several factors such as natural small molecule substrates, other interacting proteins, and reversible phosphorylation have been implicated in the regulation of PP2A function, reversible methylation appears to be central to the regulation of PP2A assembly. Reversible methylation, like phosphorylation, is now appearing to be a fundamental process for the regulation of many cellular processes (2).Methylation of the mammalian PP2A has been shown to be carried out by a specific methyltransferase (leucine carboxyl methyltransferase 1, also known as LCMT1) (3). Two homologues have been found in Saccharomyces cerevisiae, PPM1 and PPM2, which share, respectively, 30 and 26% sequence identity to the mammalian PP2A methyltransferase. It was subsequently shown that only PPM1 was responsible for the methylation of PP2A (4, 5). PPM1 codes for a 37-kDa protein that bears an AdoMet signature sequence motif but, overall, has weak sequence similarities to other methyltransferases. PP2A exists as a heterodimeric or heterotrimeric assembly containing A, B, or C subunits, and the methylation of PP2A occurs on the carboxyl moiety of the C-terminal leucine of the C subunit. The C subunit is the catalytically active component of the enzyme, whereas the A subunit purely acts as a scaffold for the C and B subunits (6). The A subunit first recruits the C catalytic subunit to form the core dimer. The B regulatory subunit comprises (at least) four families, each family containing several isoforms that can bind the AC dimer in a mutually exclusive manner and modulate the PP2A holoenzyme's substrate specificity, enzymatic activity, and/or cellular localization. PP2A is therefore present ...