Slingshot-1 (SSH1), a member of a dual-specificity protein phosphatase family, regulates actin dynamics by dephosphorylating and reactivating cofilin, an actin-depolymerizing factor. SSH1 has the SSH family-specific, N-terminal, noncatalytic (SSH-N) domain, consisting of the A and B subdomains. SSH1 is activated by binding to actin filaments. In this study, we examined the mechanisms of SSH1 substrate recognition of phospho-cofilin (P-cofilin) and SSH1 activation by F-actin. We found that P-cofilin binds to a phosphatase-inactive mutant, SSH1(CS), in which the catalytic Cys-393 is replaced by Ser. Using a series of deletion mutants, we provided evidence that both the phosphatase (P) domain and the adjacent B domain are indispensable for P-cofilin binding of SSH1(CS) and cofilin-phosphatase activity of SSH1. In contrast, the A domain is required for the F-actin-mediated activation of SSH1, but not for P-cofilin binding or basal cofilin-phosphatase activity. The P domain alone is sufficient for the phosphatase activity toward p-nitrophenyl phosphate (pNPP), indicating that the SSH-N domain is not essential for the basal phosphatase activity of SSH1. Addition of F-actin increased the cofilin-phosphatase activity of SSH1 more than 1200-fold, but the pNPP-phosphatase activity only 2.2-fold, which suggests that F-actin principally affects the cofilin-specific phosphatase activity of SSH1. When expressed in cultured cells, SSH1, but not its mutant deleted of SSH-N, accumulated in the rear of the lamellipodium. Together, these findings suggest that the conserved SSH-N domain plays critical roles in P-cofilin recognition, F-actin-mediated activation, and subcellular localization of SSH1.