Akt/protein kinase B is a pivotal component downstream of phosphatidylinositol 3-kinase (PI3K) pathway, whose activity regulates the balance between cell survival and apoptosis. Phosphorylation of Akt occurs at two key sites either at Thr308 site in the activation loop or at Ser473 site in the hydrophobic motif. The phosphorylated form of Akt (pAkt) is activated to promote cell survival. The mechanisms of pAkt dephosphorylation and how the signal transduction of Akt pathway is terminated are still largely unknown. In this study, we identified a novel protein phosphatase CSTP1(complete s transactivated protein 1), which interacts and dephosphorylates Akt specifically at Ser473 site in vivo and in vitro, blocks cell cycle progression and promotes cell apoptosis. The effects of CSTP1 on cell survival and cell cycle were abrogated by depletion of phosphatase domain of CSTP1 or by expression of a constitutively active form of Akt (S473D), suggesting Ser473 site of Akt as a primary cellular target of CSTP1. Expression profile analysis showed that CSTP1 expression is selectively down-regulated in non-invasive bladder cancer tissues and over-expression of CSTP1 suppressed the size of tumors in nude mice. Kaplan-Meier curves revealed that decreased expression of CSTP1 implicated significantly reduced recurrence-free survival in patients suffered from non-invasive bladder cancers.