Summary Phactr proteins bind actin and protein phosphatase 1 (PP1), and are involved in processes ranging from angiogenesis to cell cycle regulation. Phactrs share a highly conserved RPEL domain with the myocardin-related transcription factor (MRTF) family, where actin binding to this domain regulates both the nuclear localization and the activity of these transcription coactivators. We show here that in contrast to MRTF-A, the RPEL domain is dispensable for the subcellular localization of Phactr4. Instead, we find the domain facilitating competitive binding of monomeric actin and PP1 to Phactr4. Binding of actin to Phactr4 influences the activity of PP1 and the phosphorylation status of one of its downstream targets, cofilin. Consequently, at low actin monomer levels, Phactr4 guides PP1 to dephosphorylate cofilin. This active form of cofilin is then able to sever and depolymerize actin filaments and thus restore the actin monomer pool. Accordingly, our data discloses the central role of Phactr4 in a feedback loop, where actin monomers regulate their own number via the activation of a key regulator of actin dynamics. Depending on the protein context, the RPEL domain can thus elicit mechanistically different responses to maintain the cellular actin balance.