AbstractSerine/threonine protein phosphatase (PP) 2A regulates many biological processes, however it remains unclear whether PP2A participates in cadherin‐mediated cell–cell adhesion. We show here that the core enzyme of PP2A (PP2A‐AC) is localized in the cell–cell adhesion sites between adjacent cells and associated with the E‐cadherin‐catenins complex in non‐malignant human mammary epithelial (HME) cells at confluence. Treatment of the cells with either okadaic acid (OA), an inhibitor of PP2A, or siRNA for the regulatory subunit A of PP2A (PP2A‐A) caused disruption of cell–cell adhesion and F‐actin assembly, without affecting the complex formation of E‐cadherin with β‐ and α‐catenins. While a small GTPase Rac and its effector IQGAP1 were associated with the E‐cadherin‐catenins complex, either OA or PP2A‐A siRNA concomitantly induced the dissociation of IQGAP1, but not Rac, from the complex and the internalization of E‐cadherin from the cell surface. We therefore propose that PP2A plays a crucial role in the maintenance of cell–cell adhesion through recruitment of IQGAP1 to the Rac‐bound E‐cadherin‐catenins complex. J.Cell.Physiol. © 2005 Wiley‐Liss, Inc.