Inositol pyrophosphates are high energy signaling molecules involved in cellular processes, such as energetic metabolism, telomere maintenance, stress responses, and vesicle trafficking, and can mediate protein phosphorylation. Although the inositol kinases underlying inositol pyrophosphate biosynthesis are well characterized, the phosphatases that selectively regulate their cellular pools are not fully described. The diphosphoinositol phosphate phosphohydrolase enzymes of the Nudix protein family have been demonstrated to dephosphorylate inositol pyrophosphates; however, the Saccharomyces cerevisiae homolog Ddp1 prefers inorganic polyphosphate over inositol pyrophosphates. We identified a novel phosphatase of the recently discovered atypical dual specificity phosphatase family as a physiological inositol pyrophosphate phosphatase. Purified recombinant Siw14 hydrolyzes the -phosphate from 5-diphosphoinositol pentakisphosphate (5PP-IP 5 or IP 7 ) in vitro. In vivo, siw14⌬ yeast mutants possess increased IP 7 levels, whereas heterologous SIW14 overexpression eliminates IP 7 from cells. IP 7 levels increased proportionately when siw14⌬ was combined with ddp1⌬ or vip1⌬, indicating independent activity by the enzymes encoded by these genes. We conclude that Siw14 is a physiological phosphatase that modulates inositol pyrophosphate metabolism by dephosphorylating the IP 7 isoform 5PP-IP 5 to IP 6 .Inositol pyrophosphates are a novel class of signaling molecules that carry energy-rich diphosphate bonds. In wild-type yeast, the most abundant isoform, diphosphoinositol pentakisphosphate (PP-IP 5 or IP 7 ), 5 consists of a fully phosphorylated six carbon myo-inositol ring further pyrophosphorylated at one of the carbons. Two physiologically relevant isomers of IP 7 include 1PP-IP 5 and 5PP-IP 5 in which the pyrophosphate group is found at the 1-position or the 5-position, respectively. Sequential phosphorylation of IP 7 results in bisdiphosphoinositol tetrakisphosphate (1,5PP-IP 4 or IP 8 ) that is pyrophosphorylated at both the 1st and 5th positions (1, 2). Since their discovery more than 20 years ago, inositol pyrophosphates have been implicated in an array of processes, including cellular energetic metabolism, telomere maintenance, oxidative stress response, and vesicle trafficking in animals and fungi (1). Recent work in Saccharomyces cerevisiae found that production of inositol pyrophosphates is essential for mounting environmental stress responses (3). Inositol pyrophosphates are thought to be metabolic regulators displaying expanded cellular roles beyond classic second messengers (1).The enzymes that regulate the pools of inositol pyrophosphates are not fully described. The inositol hexakisphosphate kinases synthesize IP 7 , the most abundant inositol pyrophosphate in the cell; they add the -phosphate to IP 6 at the 5th position generating 5PP-IP 5 (2). Yeast possess a single inositol hexakisphosphate kinase gene, KCS1, whereas mammals possess three homologous genes encoding inositol hexakisphosphate kinase (Fig....