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Characterization of cardiac MYPT2 (an isoform of the smooth muscle phosphatase [MP] target subunit, MYPT1) is described. Several features of MYPT2 and MYPT1 were similar, including: a specific interaction with the catalytic subunit of type 1 phosphatase, delta isoform (PP1cdelta); interaction of MYPT2 with the small heart-specific MP subunit; interaction of the C-terminal region of MYPT2 with the active form of RhoA; phosphorylation by Rho-kinase at an inhibitory site, Thr646 and thiophosphorylation at Thr646 inhibited activity of the MYPT2-PP1cdelta complex. MYPT2 activated PP1cdelta activity, using light chains from smooth and cardiac muscle, by reducing K(m) and increasing k(cat). The extent of activation (k(cat)) was greater than for MYPT1 and could reflect distinct N-terminal sequences in the two MYPT isoforms. Adenovirus-mediated gene transfer of MYPT2 and PP1cdelta reduced the phosphorylation level of cardiac light chains following stimulation with A23187. Overexpression of MYPT2 and PP1cdelta blocked the angiotensin II-induced sarcomere organization in cultured cardiomyocytes. Electron microscopy indicated locations of MYPTs, at, or close to, the Z-line, the A band and mitochondria. Similarity of the two MYPT isoforms suggests common enzymatic mechanisms and regulation. Cardiac myosin is a substrate for the MYPT2 holoenzyme, but the Z-line location raises the possibility of other substrates.