The existence and some enzymological properties of phosphoprotein phosphatase (EC 3.1.3.16) have been established in the larval central nervous system of the tobacco hornworm, Manduca sexta (Lepidoptera: Sphingidae). A simple, sensitive and reproducible assay employing 32-P-labeled protamine as a phosphoprotein substrate was employed to measure phosphatase activity in both soluble and particulate fractions of the insect nerve cord. The specific activity of soluble phosphatase in the Manduca sexta central nervous system is of the same order of magnitude as that in mammalian brain. Nerve cord phosphoprotamine phosphatase activity may be stimulated by a variety of monovalent salts, the optimal concentration of NaCl or KCl being 0.2 molar. Activity does not appear to be dependent on bivalent metals and is stimulated by EDTA. A reduced sulfhydryl group is obligatory for maximum activity. Phosphatase could be greatly inhibited by sodium fluoride, ATP and GTP. Cyclic AMP and cyclic GMP are without effect on enzyme activity. Although most of the phosphatase activity in the insect nerve cord appears to be of cytosolic origin, much latent activity can be unmasked by incubating membranous fractions with Triton X-100. In contrast to soluble phosphatase, the detergent-solubilized activity is moderately stimulated by Mn-2+.?