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Here we report the recombinant expression of the catalytically active phosphatase domain of the Saccharomyces cerevisiae protein phosphatase 1 (Ppt1) in E. coli. Ppt1 consists of two domains: a 20 kDa TPR (tetratricopeptide repeat) domain, which mediates protein-protein interactions and directs Ppt1 to potential substrate proteins, e.g. the molecular chaperone Hsp90. The second, a 40 kDa phosphatase domain, exhibits catalytic activity and dephosphorylates phosphorylated serine/threonine residues of respective substrate proteins. The Ppt1 phosphatase domain was cloned and expressed in E. coli in unsoluble inclusion bodies. After isolating these, the aggregates were denatured with guanidinium hydrochloride and soluble protein was purified using affinity chromatography. Optimal renaturation conditions led to large amounts of the refolded phosphatase domain in high purity. Interestingly, further enzymatic studies revealed that the domain is not only correctly folded, but also shows higher catalytic activity compared to the full length protein.