Prolactin (PRL) is essential for normal reproduction and signals through two types of receptors, the short (PRL-RS) and long (PRL-RL) form. We have previously shown that transgenic mice expressing only PRL-RS (PRLR(-/-)RS) display abnormal follicular development and premature ovarian failure. Here, we report that MAPK, essential for normal follicular development, is critically inhibited by PRL in reproductive tissues of PRLR(-/-)RS mice. Consequently, the phosphorylation of MAPK downstream targets are also markedly inhibited by PRL without affecting immediate upstream kinases, suggesting involvement of MAPK specific phosphatase(s) in this inhibition. Similar results are obtained in a PRL-responsive ovary-derived cell line (GG-CL) that expresses only PRL-RS. However, we found the expression/activation of several known MAPK phosphatases not to be affected by PRL, suggesting a role of unidentified phosphatase(s). We detected a 27-kDa protein that binds to the intracellular domain of PRL-RS and identified it as dual specific phosphatase DUPD1. PRL does not induce expression of DUDP1 but represses its phosphorylation on Thr-155. We also show a physical association of this phosphatase with ERK1/2 and p38 MAPK. Using an in vitro phosphatase assay and overexpression studies, we established that DUPD1 is a MAPK phosphatase. Dual specific phosphatase inhibitors as well as siRNA to DUPD1, completely prevent PRL-mediated MAPK inhibition in ovarian cells. Our results strongly suggest that deactivation of MAPK by PRL/PRL-RS contributes to the severe ovarian defect in PRLR(-/-)RS mice and demonstrate the novel association of PRL-RS with DUPD1 and a role for this phosphatase in MAPK deactivation.