Methylation of the C-terminal leucine residue (Leu309) of protein serine/threonine phosphatase 2A catalytic subunit (PP2AC) is known to regulate catalytic activity in vitro, but the functional consequence(s) of this post-translational modification in the context of the cell remain unclear. Alkali-induced demethylation of PP2AC in purified PP2A heterotrimer (ABalphaC), but not in purified PP2A heterodimer (AC), indicated that a larger fraction of PP2AC is carboxymethylated in ABalphaC than in AC. To explore the role of Leu309 in PP2A holoenzyme assembly, epitope-tagged PP2A catalytic subunit (HA-PP2A) and a mutant of HA-PP2A containing an alanine residue in place of Leu309 (HA-PP2A-L309A) were transiently expressed in COS cells. Both recombinant proteins exhibited serine/threonine phosphatase activity when immunoisolated from COS cell extracts. HA-PP2A, but not HA-PP2A-L309A, was carboxymethylated in vitro. A chromatographic analysis of cell extracts indicated that most endogenous PP2AC and HA-PP2A were co-eluted with the A and Balpha regulatory subunits of PP2A, whereas most HA-PP2A-L309A seemed to elute with the A subunit as a smaller complex or, alternatively, as free catalytic (C) subunit. The A subunit co-immunoisolated with both tagged proteins; however, substantially less Balpha subunit co-immunoisolated with HA-PP2A-L309A than with HA-PP2A. These results demonstrate that the reversibly methylated C-terminal leucine residue of PP2AC is important for Balpha regulatory subunit binding. Furthermore, the results provide evidence for an interrelationship between PP2AC carboxymethylation and PP2A holoenzyme assembly.