In bovine iris sphincter, myo-inositol 1,4,5-trisphosphate (IP3) 5-phosphatase and myo-inositol 1-phosphate (IP1) monophosphatase are mainly localized in the microsomal and soluble fractions, respectively. Studies on the properties of these enzymes can be summarized as follows. (1) The microsomal IP3 5-phosphatase hydrolyzed IP3 to myo-inositol 1,4-bisphosphate with an apparent K-m of 28 mu M and V-max of 32 nmol/min per mg protein. The IP1 monophosphatase in the soluble fraction hydrolyzed IP1 into free inositol with an apparent K-m of 89 mu M and V-max of 7 nmol/min per mg protein. (2) IP3 5-phosphatase and IP1 monophosphatase had optimal pH values at 8.0 and 7.0, respectively. (3) Both enzymes required Mg2+ and their highest specific activities were at a cation concentration of 2 mM. (4) Ca2+ (> 0.5 mu M) exerted an inhibitory effect on IP3 5-phosphatase activity, and marked inhibition (47%) was observed at a concentration of 10 mu M. Higher concentrations of the cation (> 100 mu M) were required to inhibit IP1 monophosphatase. (5) IP1 monophosphatase, but not IP3 5-phosphatase, was inhibited by Li+.Li+ had no effect on the contractile response in this smooth muscle. (6) Both enzymes were inhibited by ATP and by the thiol-blocking agent, disulfiram. In addition, thimerosal, a thiol reagent, also inhibited the IP3 5-phosphatase activity. (7) Protein phosphorylation of the microsomal and soluble fractions with PKA or PKC had no effect on the activities of these enzymes. (8) Okadaic acid, a protein phosphatase inhibitor, had no effect on the activity of IP3 5-phosphatase. However, in the intact iris sphincter the toxin significantly reduced the carbachol-induced IP3 production, 1,2-diacylglycerol formation, measured as phosphatidic acid, and caused muscle relaxation.