Mannose 6-phosphate (Man6P) residues represent a recognition signal required for efficient receptor-dependent transport of soluble lysosomal proteins to lysosomes. Upon arrival, the proteins are rapidly dephosphorylated. We used mice deficient for the lysosomal acid phosphatase Acp2 or Acp5 or lacking both phosphatases (Acp2/Acp5(-/-)) to examine their role in dephosphorylation of Man6P-containing proteins. Two-dimensional (2D) Man6P immunoblot analyses of tyloxapol-purified lysosomal fractions revealed an important role of Acp5 acting in concert with Acp2 for complete dephosphorylation of lysosomal proteins. The most abundant lysosomal substrates of Acp2 and Acp5 were identified by Man6P affinity chromatography and mass spectrometry. Depending on the presence of Acp2 or Acp5, the isoelectric point of the lysosomal cholesterol-binding protein Npc2 ranged between 7.0 and 5.4 and may thus regulate its interaction with negatively charged lysosomal membranes at acidic pH. Correspondingly, unesterified cholesterol was found to accumulate in lysosomes of cultured hepatocytes of Acp2/Acp5(-/-) mice. The data demonstrate that dephosphorylation of Man6P-containing lysosomal proteins requires the concerted action of Acp2 and Acp5 and is needed for hydrolysis and removal of degradation products.