Cellular responses to external stimuli proceed through multiply complex signal transduction networks. The manner by which signals are propagated from the cell's surface to the nuclei is, in large part, dependent on the phosphorylation of signaling proteins mediated by kinases. As in most biological systems, this process of kinase-mediated phosphorylation is balanced by the presence of a dephosphorylating system comprised of a number of families of phosphatases. The purpose of this review is to describe the various members of the main classes of phosphatases and to examine their role in regulating signal transduction pathways relevant to critical illness. Because recent work has provided key insight into the role of kinase-mediated signaling pathways, such as the mitogen-activated protein kinase and inhibitor of nuclear factor-kappa B kinase pathways, in inflammatory states, emphasis has been placed on the regulation of these events. It is hoped that deriving novel insight into the regulatory phosphatases will allow a greater understanding of inflammatory cell signaling events and potentially identify novel sites for therapeutic intervention in the future.