The HOG (high-osmolarity glycerol) mitogen-activated protein kinase (MAPK) pathway regulates the osmotic stress response in the yeast Saccharomyces cerevisiae. Three type 2C Ser/Thr phosphatases (PTCs), Ptc1, Ptc2, and Ptc3, have been isolated as negative regulators of this pathway. Previously, multicopy expression of PTC1 and PTC3 was shown to suppress lethality of the sln1Delta strain due to hyperactivation of the HOG pathway. In this work, we show that PTC2 also suppresses sln1Delta lethality. Furthermore, the phosphatase activity of these PTCs was needed for suppression, as mutation of a conserved Asp residue, likely to coordinate a metal ion, inactivated PTCs. Further analysis of Ptc1 function in vivo showed that it inactivates the MAPK, Hog1, but not the MEK, Pbs2. In the wild type, Hog1 kinase activity increased transiently, approximately 12-fold in response to osmotic stress, while overexpression of PTC1 limited activation to approximately 3-fold. In contrast, overexpression of PTC1 did not inhibit phosphorylation of Hog1 Tyr in the phosphorylation lip, suggesting that Ptc1 does not act on Pbs2. Deletion of PTC1 also strongly affected Hog1, leading to high basal Hog1 activity and sustained Hog1 activity in response to osmotic stress, the latter being consistent with a role for Ptc1 in adaptation. In vitro, Ptc1 but not the metal binding site mutant, Ptc1D58N, inactivated Hog1 by dephosphorylating the phosphothreonine but not the phosphotyrosine residue in the phosphorylation lip. Consistent with its role as a negative regulator of Hog1, which accumulates in the nucleus upon activation, Ptc1 was found in both the nucleus and the cytoplasm. Thus, one function of Ptc1 is to inactivate Hog1.