The yeast two hybrid system has been employed to identify cDNAs encoding proteins which interact with the gamma 1 isoform of human protein phosphatase 1. Here we report the isolation of cDNA encoding human protein phosphatase inhibitor. The deduced human sequence of 205 amino acids shows 92% identity to inhibitor 2 from rabbit. Human inhibitor 2 was expressed in E. coli and purified to homogeneity. The expressed human protein inhibited both native and bacterially expressed PP1, with the same Ki (1 nM) as inhibitor 2 purified from skeletal muscle. A gene or pseudogene for inhibitor 2 may be present near the major histocompatibility complex on chromosome 6.