We have shown previously that brain tissue contains protein kinases which can phosphorylate tau protein to a state reminiscent of the pathological state of Alzheimer paired helical filaments (PHFs); these include proline-directed kinases which phosphorylate SP or TP motifs (such as MAP kinase and GSK-3) [Drewes et al. (1992); Mandelkow et al. (1992)], as well as a novel kinase which phosphorylates S262 of tau protein and thereby strongly reduces the binding of tau to microtubules [Biernat et al. (1993)]. Here we report on the corresponding phosphatases in brain which normally keep the 'pathological' sites free of phosphate. The major phosphatases acting on tau are calcineurin and PP-2A, but not PP-1. Both are present and active in brain extracts, they can dephosphorylate recombinant tau after prior phosphorylation with either MAP kinase, GSK-3, or brain extract, and the course of dephosphorylation can be monitored with antibodies diagnostic of the pathological state of tau. Both phosphatases also act directly on PHF tau isolated from Alzheimer brains.