Inositol pyrophosphates are highly phosphorylated nutrient messengers. The final step of their biosynthesis is catalyzed by diphosphoinositol pentakisphosphate kinase (PPIP5K) enzymes, which are conserved among fungi, plants, and animals. PPIP5Ks contain an N-terminal kinase domain that generates the active messenger 1,5-InsP8 and a C-terminal phosphatase domain that participates in PP-InsP catabolism. The balance between kinase and phosphatase activities controls the cellular levels and signaling capacity of 1,5-InsP8. Here, we present crystal structures of the apo and substrate-bound Vip1 phosphatase domain from S. cerevisiae (ScVip1PD). ScVip1PD is a phytase-like inositol 1-pyrophosphate phosphatase with two conserved histidine phosphatase catalytic motifs. The enzyme has a strong preference for 1,5-InsP8 and is inhibited by inorganic phosphate. ScVip1PD has an alpha-helical insertion domain stabilized by a structural Zn2+ binding site, and a unique GAF domain that exists in an open and closed state, allowing channeling of the 1,5-InsP8 substrate to the active site. Mutations that alter the active site, that restrict the movement of the GAF domain or that modify the charge of the substrate channel significantly inhibit the activity of the yeast enzyme in vitro, and the function of the Arabidopsis PPIP5K VIH2 in planta. Structural analyses of full-length PPIP5Ks suggest that the kinase and phosphatase are independent enzymatic modules. Taken together, our work reveals the structure, enzymatic mechanism and regulation of eukaryotic PPIP5K phosphatases.