Changes in the cytoplasmic inorganic phosphate (P-i) concentrations are an important cue for the plant cells to regulate their metabolism and phosphate homeostasis. However, phosphate sensors/receptors involved in this regulation are largely unknown. P-i is a common nonspecific competitive inhibitor of phosphatases, usually in millimolar range. Here we report a procedure to refold recombinant Arabidopsis thaliana protein Ser/Thr phosphatase PP7 and demonstrate that PP7 is inhibited by submillimolar P-i concentrations (IC50 = 0.66 +/- 0.14 mM) via a mainly noncompetitive mechanism. The results indicate that PP7 may possess a specific P-i-binding site responsible for its allosteric regulation, and suggest a possible phosphate sensor function for this protein phosphatase.