We have recently identified PP7, a novel group of plant protein Ser/Thr phosphatases, and hypothesized that PP7 may possess a calmodulin-binding site. To test this hypothesis, we assessed the effect of calmodulin on the activity of recombinant Arabidopsis thaliana PP7 and directly tested interaction between PP7 and calmodulin using surface plasmon resonance. Calmodulin exerted a moderate inhibitory effect on the phosphatase activity of PP7 with submicromolar affinity. PP7 specifically interacted with immobilized calmodulin (but not with recoverin, another EF hand Ca(2+)-binding protein) in a strictly Ca(2+)-dependent manner with nanomolar affinity. Deletion of an insert in the catalytic domain of PP7, predicted to function as a calmodulin-binding site, greatly decreased PP7 binding to calmodulin. These findings provide the first evidence for a plant protein phosphatase directly interacting with calmodulin and indicate that PP7 might be regulated by Ca(2+) levels in vivo.