Recent progress in studies on the properties and regulation of liver phosphorylase phosphatase can be divided into four stages. First, isolation from multiple molecular forms of phosphorylase phosphatase, of a single form of catalytic subunit (Mr = 32 000-35 000) which is active toward phosphorylase a and also toward a variety of protein substrates phosphorylated by either cyclic AMP-dependent protein kinase or other protein kinases. This was achieved by rather drastic procedures such as treatment with 80% ethanol at room temperature, incubation with 6 M urea, freeze-thawing in the presence of 0.2 M mercaptoethanol, or digestion by trypsin. These treatments caused concomitantly large enhancement of phosphorylase phosphatase activity, and the hypothesis was proposed that an ‘inactive’ form of phosphorylase phosphatase existed as complexes of a catalytic subunit and inhibitory proteins. Second, it was discovered that liver and muscle extracts contain trypsin-labile proteins which, after heating at 90 °C, inhibited the catalytic subunit of phosphorylase phosphatase. Two types of protein inhibitors were identified: ‘inhibitor-I’ was phosphorylated and activated by cyclic AMP-dependent protein kinase, whereas ‘inhibitor-2’ was not phosphorylated. Although inhibitor-1 has been implicated in hormonal regulation of glycogen metabolism in skeletal muscle, a similar role of protein inhibitors in the regulation of phosphorylase phosphatase in the liver has not been demonstrated and the physiological role of the inhibitor is questionable.