Cdc25B and Cdc25C are closely related dual specificity phosphatases that activate cyclin-dependent kinases by removal of inhibitory phosphorylations, thereby triggering entry into mitosis. Cdc25B, but not Cdc25C, has been implicated as an oncogene and been shown to be overexpressed in a variety of human tumors. Surprisingly, ectopic expression of Cdc25B, but not Cdc25C, inhibits cell proliferation in long term assays. Chimeric proteins generated from the two phosphatases show that the anti-proliferative activity is associated with the C-terminal end of Cdc25B. Indeed, the catalytic domain of Cdc25B is sufficient to suppress cell viability in a manner partially dependent upon its C-terminal 26 amino acids that is shown to influence substrate binding. Mutation analysis demonstrates that both the phosphatase activity of Cdc25B as well as its ability to interact with its substrates contribute to the inhibition of cell proliferation. These results demonstrate key differences in the biological activities of Cdc25B and Cdc25C caused by differential substrate affinity and recognition. This also argues that the antiproliferative activity of Cdc25B needs to be overcome for it to act as an oncogene during tumorigenesis.