We have cloned a novel inositol polyphosphate 5-phosphatase from the rat brain cDNA library. It contains two highly conserved 5-phosphatase motifs, both of which are essential for its enzymatic activity. Interestingly, the proline content of this protein is high and concentrated in its N- and C-terminal regions. One putative SH3-binding motif and six 14-3-3 zeta-binding motifs were found in the amino acid sequence. This enzyme hydrolyzed phosphate at the D-5 position of inositol 1,4,5-trisphosphate, inositol 1,3,4, 5-tetrakisphosphate, and phosphatidylinositol 4,5-bisphosphate, consistent with the substrate specificity of type II 5-phosphatase, OCRL, synaptojanin and synaptojanin 2, already characterized 5-phosphatases. When the Myc-epitope-tagged enzyme was expressed in COS-7 cells and stained with anti-Myc polyclonal antibody, a signal was observed at ruffling membranes and in the cytoplasm. We prepared several deletion mutants and demonstrated that the 123 N-terminal amino acids (311-433) and a C-terminal proline-rich region containing 277 amino acids (725-1001) were essential for its localization to ruffling membranes. This enzyme might regulate the level of inositol and phosphatidylinositol polyphosphates at membrane ruffles.