Activation and inactivation of protein kinases and phosphatases trigger key events in the eukaryotic cell division cycle. Coordinating the opposing actions of kinases and phosphatases is also crucial for determining the cellular response to physiological stimuli. While regulatory subunits can control the subcellular localization and substrate specificity of protein phosphatases, endogenous inhibitors represent a mechanism for regulating the overall activity of specific enzymes in mammalian tissues. Some phosphatase inhibitors are phosphoproteins. Therefore, they communicate changes in kinase activity to selected phosphatases. This crosstalk between kinases and phosphatases defines the physiological response. Current knowledge on the mode of action of phosphatase inhibitors and their potential contributions to cell growth and differentiation are discussed.