Removal of the C-terminal seven residues from phosphoglycerate mutase from Saccharomyces cerevisiae by limited proteolysis is associated with loss of mutase activity, but no change in phosphatase activity. The presence of the cofactor 2, 3-bisphosphoglycerate, or of the cofactor and substrate 3-phosphoglycerate together, confers protection against proteolysis. The substrate alone offers no protection. Replacement of either or both of the two lysines at the C-terminus by glycines has only limited effects on the kinetic properties of phosphoglycerate mutase, indicating that these residues are unlikely to be involved in crucial electrostatic interactions with the substrate, intermediate or product in the reaction. However, the double-mutant form of the enzyme is more sensitive to proteolysis and is no longer protected against proteolysis by the presence of cofactor. The proteolysed wild-type and two of the mutated forms of the enzyme show a reduced response to 2-phosphoglycollate, which enhances the instability of the phospho form of the native enzyme. The phosphoglycerate mutase from Schizosaccharomyces pombe, which lacks the analogous C-terminal tail, has an inherently lower mutase activity and is also less responsive to stimulation by 2-phosphoglycollate. It is proposed that the C-terminal region of phosphoglycerate mutase helps to maintain the enzyme in its active phosphorylated form and assists in the retention of the bisphosphoglycerate intermediate at the active site. However, its role seems not to be to contribute directly to ligand binding, but rather to exert indirect effects on the transfer of the phospho group between substrate, enzyme, intermediate and product.