The phosphorylase phosphatases in rat and rabbit liver cytosol that are markedly stimulated by histone H1, protamine and polylysine were identified as protein phosphatases-2A0, 2A1 and 2A2 by anion-exchange chromatography, gel-filtration and immunotitration experiments. Histone H1 and protamine also stimulated the dephosphorylation of phosphorylase kinase, glycogen synthase, fructose-1,6-bisphosphatase, pyruvate kinase, acetyl-CoA carboxylase and phenylalanine hydroxylase by phosphatases-2A1 and 2A2, and with several of these substrates activation was even more striking (20-100-fold) than that observed with phosphorylase (approximately 5-fold). Activation by basic polypeptides did not involve dissociation of these phosphatases to the free catalytic subunit. The dephosphorylation of phosphorylase by protein phosphatase-1 was suppressed by basic polypeptides, protamine and polylysine being the most potent inhibitors. However, the dephosphorylation of glycogen synthase, pyruvate kinase and acetyl-CoA carboxylase were markedly stimulated by histone H1 and protamine (2-13-fold). Consequently, with the appropriate substrates, protein phosphatase-1 can also be regarded as a basic-polypeptide-activated protein phosphatase. Heparin stimulated (1.5-2-fold) the dephosphorylation of phosphorylase by phosphatases-2A0 and 2A1, provided that Mn2+ was present, but phosphatase-2A2 and the free catalytic subunit of phosphatase-2A were unaffected. Heparin, in conjunction with Mn2+, also stimulated (1.5-fold) the dephosphorylation of glycogen synthase (labelled in sites 3 abc), phosphorylase kinase and phenylalanine hydroxylase by phosphatase-2A1, but not by phosphatase-2A2. By contrast, the dephosphorylation of phosphorylase and phosphorylase kinase by protein phosphatase-1 was inhibited by heparin. However, dephosphorylation of glycogen synthase and pyruvate kinase by phosphatase-1 was stimulated by this mucopolysaccharide. The studies demonstrate that basic proteins can be used to distinguish protein phosphatase-1 from protein phosphatase-2A, but only if phosphorylase is employed as substrate. Optimal differentiation of the two phosphatases is observed at 30 micrograms/ml protamine or at heparin concentrations greater than 150 microM.