Phosphatidate phosphatase (PAP) enzymes are classified as either Mg(2+)-dependent (PAP1) or Mg(2+)-independent (PAP2) with respect to their Mg(2+) cofactor requirement for catalytic activity. Sensitivity to the thioreactive compound N-ethylmaleimide (NEM) has also been used to differentiate PAP1 (NEM-sensitive) from PAP2 (NEM-insensitive) activity in mammalian cells. We report here the cloning and initial characterization of DPPL1 and DPPL2, representatives of a novel type of mammalian phosphatidate phosphatase. Both DPPL1 and DPPL2 show greater homology to a yeast diacylglycerol pyrophosphate (DGPP) phosphatase, DPP1, than to known phosphatidate phosphatases of mammals. Like the yeast DPP1 protein, both DPPL1 and DPPL2 proteins show broad substrate specificity, but DGPP is the preferred substrate compared with LPA and PA. These reactions are Mg(2+)-independent, but unlike DPP1 and mammalian PAP2, they are sensitive to NEM. DPPL1 mRNA is ubiquitously expressed in various tissues and cells, but DPPL2 mRNA is restricted to several tissues including the brain, kidney and testis, and it is preferentially expressed in endothelial cells. Immunohistological staining of synovium containing vessels, plasma cells and lymphocytes revealed specific expression of DPPL2 protein in the endothelium. Collectively, our work indicates that DPPL1 and DPPL2 represent a novel type of mammalian phosphatidate phosphatase.