The Myxococcus xanthus protein phosphatase Pph3 belongs to the Mg(2+)- or Mn(2+)-dependent protein phosphatase (PPM) family. Bacterial PPMs contain three divalent metal ions and a flap subdomain. Putative metal- or phosphate-ion binding site-specific mutations drastically reduced enzymatic activity. Pph3 contains a cyclic nucleotide monophosphate (cNMP)-binding domain in the C-terminal region, and it requires 2-mercaptoethanol for phosphatase activity; however, the C-terminal deletion mutant showed high activity in the absence of 2-mercaptoethanol. The phosphatase activity of the wild-type enzyme was higher in the presence of cAMP than in the absence of cAMP, whereas a triple mutant of the cNMP-binding domain showed slightly lower activities than those of wild-type, without addition of cAMP. In addition, mutational disruption of a disulphide bond in the wild-type enzyme increased the phosphatase activity in the absence of 2-mercaptoethanol, but not in the C-terminal deletion mutant. These results suggested that the presence of the C-terminal region may lead to the formation of the disulphide bond in the catalytic domain, and that disulphide bond cleavage of Pph3 by 2-mercaptoethanol may occur more easily with cAMP bound than with no cAMP bound.