The carboxy terminus of protein phosphatase 2A (PP2A) catalytic subunit is highly conserved. Seven out of the last nine residues, including two potential in vivo phosphorylation sites, threonine 304 and tyrosine 307, are completely invariant in all known PP2As. Mutational analysis of the carboxy terminus in vivo was facilitated by efficient immunoprecipitation of trimeric PP2A holoenzyme via an epitope-tagged catalytic subunit. The results indicate that the catalytic subunit carboxy terminus is important for complex formation with the PP2A 55 kDa regulatory B subunit, but not with polyomavirus oncogene, middle tumor antigen (MT), a viral B-type regulatory subunit. Replacing catalytic subunit threonine 304 or tyrosine 307 with a negatively charged amino acid abolished binding of the B subunit to the dimeric enzyme core and altered substrate specificity. Certain other amino acid substitutions of different size and/or charge also abolished or greatly reduced B subunit binding. Substitution of alanine at position 304 or phenylalanine at position 307 did not dramatically reduce B subunit binding or phosphatase activity in vitro, yet the latter substitutions are not found in naturally occurring PP2As. Thus, the wild-type residues are important for a yet unknown function in vivo. Additionally, deleting the carboxy terminal nine amino acids inhibited binding of the B subunit to the dimeric enzyme core, indicating a requirement for one or more of these amino acids for complex formation. MT interaction with the dimeric PP2A enzyme core was not inhibited by any of these mutations. Finally, unlike B subunit, MT does not activate the phosphatase activity of the PP2A heterodimer towards cdc2-phosphorylated histone H1.