Protein phosphatase-1 (PP1) and protein phosphatase-2A (PP2A) are responsible for the dephosphorylation of the majority of phosphoserine/threonine residues in cells. In this study, we show that (–)-epigallocatechin-3-gallate (EGCG) and 1,2,3,4,6-penta-O-galloyl-β-d-glucose (PGG), polyphenolic constituents of green tea and tannins, inhibit the activity of the PP1 recombinant δ-isoform of the PP1 catalytic subunit and the native PP1 catalytic subunit (PP1c) with IC50 values of 0.47–1.35 μm and 0.26–0.4 μm, respectively. EGCG and PGG inhibit PP2Ac less potently, with IC50 values of 15 and 6.6 μm, respectively. The structure–inhibitory potency relationships of catechin derivatives suggests that the galloyl group may play a major role in phosphatase inhibition. The interaction of EGCG and PGG with PP1c was characterized by NMR and surface plasmon resonance-based binding techniques. Competitive binding assays and molecular modeling suggest that EGCG docks at the hydrophobic groove close to the catalytic center of PP1c, partially overlapping with the binding surface of microcystin-LR or okadaic acid. This hydrophobic interaction is further stabilized by hydrogen bonding via hydroxyl/oxo groups of EGCG to PP1c residues. Comparative docking shows that EGCG binds to PP2Ac in a similar manner, but in a distinct pose. Long-term treatment (24 h) with these compounds and other catechins suppresses the viability of HeLa cells with a relative effectiveness reminiscent of their in vitro PP1c-inhibitory potencies. The above data imply that the phosphatase-inhibitory features of these polyphenols may be implicated in the wide spectrum of their physiological influence.