We have identified and characterized two novel allyl pyrophosphatase activities from rat liver microsomes. One specifically hydrolyzes farnesyl pyrophosphate (FPP) to farnesol and the other converts geranylgeranyl pyrophosphate (GGPP) to geranylgeranol. Hence, we named them farnesyl pyrophosphatase (FPPase) and geranylgeranyl pyrophosphatase (GGPPase) activities, respectively. Other allyl pyrophosphates, i.e., isopentenyl pyrophosphate, dimethyl allyl pyrophosphate, and geranyl pyrophosphate, did not act as substrates for these activities. Both activities are metal ion independent and exhibit acidic pH optima (5.5 and 6.0). Microsomal FPPase has a Km for FPP of 7 microM and a specific activity of 6.8 nmol/min/mg protein at pH 5.5. GGPP is a potent noncompetitive inhibitor of FPPase. FPP has no inhibitory effect on GGPPase activity. Microsomal GGPPase has a Km for GGPP of 12 microM and a specific activity of 14 nmol/min/mg protein. The Km of FPPase activity for FPP increases with an increase in pH. The GGPPase activity remains unaffected with an increase in pH. Metal ions Zn2+ and Mn2+ are potent inhibitors of GGPPase activity. Zaragozic acid B is a weak inhibitor of FPPase/GGPPase activities as compared to squalene synthase. GGPPase activity is inhibited with a fourfold higher IC50 (20 microM) as compared to FPPase (5 microM). Hence, the FPPase and GGPPase activities can be differentiated by zaragozic acid B inhibition. Kinetic analysis of inhibition of FPPase by zaragozic acid B further indicates that it is a mixed type noncompetitive inhibitor.