The C-terminal domain (CTD) of RNA polymerase II undergoes extensive phosphorylation and dephosphorylation at positions Ser2 and Ser5 during the transcription cycle. A single CTD phosphatase, Fcp1, has been identified in yeast and metazoans. Here we conducted a biochemical characterization of Fcp1 from the fission yeast Schizosaccharomyces pombe. The 723-amino acid Fcp1 protein was expressed at high levels in bacteria. Recombinant Fcp1 catalyzed the metal-dependent hydrolysis of para-nitrophenyl phosphate with a pH optimum of 5.5 (kcat = 2 s(-1); K(m) = 19 mm). Deletion analysis showed that 139- and 143-amino acid segments could be deleted from the N and C termini of Fcp1, respectively, without affecting phosphatase activity. A segment containing amino acids 487-580, deletion of which abolished activity, embraces a BRCT domain present in all known Fcp1 orthologs. Mutations of residues Asp170 and Asp172 abrogated Fcp1 phosphatase activity; the essential aspartates are located within a 170DXDXT172 motif that defines a superfamily of metal-dependent phosphotransferases. We exploited defined synthetic CTD phosphopeptide substrates to show for the first time that: (i) Fcp1 CTD phosphatase activity is not confined to native polymerase II and (ii) Fcp1 displays an inherent preference for a particular CTD phosphorylation array. Using equivalent concentrations (25 microm) of CTD peptides of identical amino acid sequence and phosphoserine content, which differed only in the positions of phosphoserine within the heptad, we found that Fcp1 was 10-fold more active in dephosphorylating Ser2-PO4 than Ser5-PO4.