Mutations at the ABII (abscisic acid insensitive 1) locus of the plant Arabidopsis thaliana cause a reduction in sensitivity to the plant hormone abscisic acid. The sequence of ABII predicts a protein composed of an N-terminal domain that contains motifs for an EF-hand Ca2+-binding site, and a C-terminal domain with similarities to protein serine/threonine phosphatases 2C. We report here two sets of experimental evidence that indicate that ABI1 has typical protein phosphatase 2C activity. First, expression of the ABI1 C-terminal domain partially complemented the temperature-sensitive growth defect of a Saccharomyces cerevisiae protein phosphatase 2C mutant. Second, recombinant proteins that contained the ABI1 C-terminal domain displayed in vitro phosphatase activity towards 32P-labelled casein, and this activity displayed Mg2+ or Mn+ dependence and okadaic acid insensitivity typical of protein phosphatases 2C. Characterisation of recombinant proteins that contained various portions of ABI1 indicated that the putative EF-hand motif is unlikely to mediate Ca2+ regulation of the ABI1 phosphatase activity at physiological Ca2+ concentrations, and may represent an EF-hand analogue rather than an EF-hand homologue. The abil-1 mutation appeared to cause significant reduction in the phosphatase activity of ABI1. These results are discussed in relation to the dominant phenotype of abil-1 over the wild-type allele in plants, and to the possible role of ABI1 in abscisic acid signalling.