Protein tyrosine phosphatases regulate important processes in eukaryotic cells and have critical functions in many human diseases including diabetes to cancer. Here, we report that the human Vaccinia H1-related (VHR) dual-specific protein tyrosine phosphatase regulates cell-cycle progression and is itself modulated during the cell cycle. Using RNA interference (RNAi), we demonstrate that cells lacking VHR arrest at the G1-S and G2-M transitions of the cell cycle and show the initial signs of senescence, such as flattening, spreading, appearance of autophagosomes, beta-galactosidase staining and decreased telomerase activity. In agreement with this notion, cells lacking VHR were found to upregulate p21(Cip-Waf1), whereas they downregulated the expression of genes for cell-cycle regulators, DNA replication, transcription and mRNA processing. Loss of VHR also caused a several-fold increase in serum-induced activation of its substrates, the mitogen-activated protein (MAP) kinases Jnk and Erk. VHR-induced cell-cycle arrest was dependent on this hyperactivation of Jnk and Erk, and was reversed by Jnk and Erk inhibition or knock-down. We conclude that VHR is required for cell-cycle progression as it modulates MAP kinase activation in a cell-cycle phase-dependent manner.