The wild-type p53-induced phosphatase, Wip1 (PP2Cdelta or PPM1D) is a member of the protein phosphatase 2C (PP2C) family and functions as a negative regulator of the p38 MAP kinase-p53 signaling pathway. PPM1D is amplified or Wip1 is overexpressed in several human cancers, and it acts as a weak oncogene. Although inhibition of Wip1 may have therapeutic value, no specific inhibitors are available. In this study, we designed phosphopeptide inhibitors for Wip1 on the basis of its optimal substrate sequence. We found that phosphoserine-containing diphosphorylated peptides with the sequence pSXpY inhibited Wip1 phosphatase activity, whereas phosphothreonine-containing peptides with the sequence pTXpY were physiological substrates. Moreover, the X residue in the pSXpY sequence modulated inhibitor activity, and beta-branched amino acid-substituted (Ile or Val) phosphopeptides showed high inhibitory potencies. A thioether cyclic phosphopeptide c(MpSIpYVA) had a K(i) <1.0 microM. Two serine/threonine phosphatases, PP2Calpha and PP2A, were not significantly inhibited by the cyclic phosphopeptide with a nonhydrolyzable phosphoserine mimetic. A homology model of Wip1 bound to a cyclic phosphopeptide and site-directed mutagenesis helped to identify residues important for Wip1 inhibitor selectivity among the PP2C family. These results provide the first proof of concept of a specific inhibitor of the catalytic site of Wip1 and should be useful for developing potential anti-cancer drugs.