We have shown previously that 6-phosphofructo-2-kinase in yeast has negligible fructose-2,6-bisphosphatase activity even though resembling in part of its C-terminal sequence the phosphatase domain of the bifunctional liver enzyme. Here we show that exchanging Ser-404 to His-404 in the yeast peptide creates a bifunctional enzyme with a fructose-2,6-bisphosphatase activity involving a phosphoprotein intermediate. Like mammalian bifunctional enzymes, the His-404 mutant protein is readily phosphorylated by fructose 2,6-P2 with a half-saturation of 0.4 microM, the same Km value as for its fructose-2,6-bisphosphatase activity. Protein phosphorylation by the C-subunit of cAMP-dependent protein kinase, presumably at a C-terminal consensus site, increases the Km value to 1.5 microM. The newly created fructose-2,6-bisphosphatase is inhibited competitively by its product fructose 6-P with a K(i) of 0.6 mM. No effect of the His-404 mutation was found on 6-phosphofructo-2-kinase activity, in line with the mutant yeast enzyme having independent kinase and phosphatase domains, like its mammalian wild-type counterparts. The results would fit with the evolution of the PFK26 gene having involved fusion between kinase and phosphatase genes--as proposed for the mammalian enzyme--but with accompanying or later silencing of the fructose-2,6-bisphosphatase activity.