The C-terminal domain of the suppressor of T cell receptor (TCR) signaling 1 and 2 (Sts-1 and -2) proteins has homology to the 2H-phosphatase family of enzymes. The phosphatase activity of the correspondent Sts-1 domain, Sts-1(PGM), is key for its ability to negatively regulate the signaling of membrane-bound receptors including TCR and the epidermal growth factor receptor (EGFR). A nucleophilic histidine, which is transiently phosphorylated during the phosphatase reaction, is essential for the activity. Here, we present the crystal structure of Sts-2(PGM) in the phosphorylated active form and bound to VO(3), which represent structures of an intermediate and of a transition state analogue along the path of the dephosphorylation reaction. In the former structure, the proposed nucleophilic His366 is the only phoshorylated residue and is stabilized by several interactions with conserved basic residues within the active site. In the latter structure, the vanadium atom sits in the middle of a trigonal bipyramid formed by the three oxygen atoms of the VO(3) molecule, atom NE2 of His366, and an apical water molecule W(a). The V-NE2 bond length (2.25 A) suggests that VO(3) is not covalently attached to His366 and that the reaction mechanism is partially associative. The two structures also suggest a role for Glu476 in activating a uniquely positioned water molecule. In both structures, the conformation of the active site is remarkably similar to the one seen in apo-Sts-2(PGM) suggesting that the spatial arrangement of the catalytic residues does not change during the dephosphorylation reaction.