The progressive myoclonus epilepsy of Lafora type is an autosomal recessive disorder caused by mutations in the EPM2A gene. EPM2A is predicted to encode a putative tyrosine phosphatase protein, named laforin, whose full sequence has not yet been reported. In order to understand the function of the EPM2A gene, we isolated a full-length cDNA, raised an antibody and characterized its protein product. The full-length clone predicts a 38 kDa laforin that was very close to the size detected in transfected cells. Recombinant laforin was able to hydrolyze phosphotyrosine as well as phosphoserine/threonine substrates, demonstrating that laforin is an active dual-specificity phosphatase. Biochemical, immunofluorescence and electron microscopic studies on the full-length laforin expressed in HeLa cells revealed that laforin is a cytoplasmic protein associated with polyribosomes, possibly through a conformation-dependent protein-protein interaction. We analyzed the intracellular targeting of two laforin mutants with missense mutations. Expression of both mutants resulted in ubiquitin-positive perinuclear aggregates suggesting that they were misfolded proteins targeted for degradation. Our results suggest that laforin is involved in translational regulation and that protein misfolding may be one of the molecular bases of the Lafora disease phenotype caused by missense mutations in the EPM2A gene.