Papovavirus tumor antigens have been shown to associate with the cellular phosphoserine/threonine-specific protein phosphatase 2A (PP2A). We were interested in the consequences that T-antigen association might have on PP2A activity and so studies of the phosphatase activity in immunoprecipitates, prepared from polyoma virus-transformed or polyoma virus-infected mouse 3T3 fibroblasts, were performed. The phosphoserine/threonine phosphatase activity, measured with phosphorylase a as the substrate, showed all the characteristics of PP2A. It was stimulated by polycations, inhibited by fluoride or p-nitrophenyl phosphate, sensitive to okadaic acid and microcystin and insensitive to inhibitor-1 and inhibitor-2. Phosphotyrosyl phosphatase (PTPase) activity was associated with the middle-T/small-T-associated complex when reduced, carboxamidomethylated and maleylated lysozyme, phosphorylated exclusively on tyrosyl residues, was used as the substrate. This PTPase activity was as sensitive to okadaic acid as was the phosphorylase phosphatase activity; it could be inhibited by phosphorylase a and did not dephosphorylate poly(Glu80Tyr20). The level of middle-T/small-T-associated PTPase activity relative to the phosphorylase phosphatase activity was tenfold higher than that of the purified dimeric PP2A. A similar activity ratio was observed with the purified phosphatase after stimulation with a cellular protein, designated phosphotyrosyl phosphatase activator. These results suggest that the same enzyme may possess dual specificity. In contrast to the cellular trimeric PP2A, containing the 55-kDa putative regulatory subunit, the middle-T/small-T-associated enzyme had low activity towards a retinoblastoma peptide phosphorylated by p34ede2. These results indicate how middle-T/small-T might effect the activity of PP2A in polyoma virus-transformed cells.