Serine/threonine protein phosphatase (PP) 2A regulates many biological processes, however it remains unclear whether PP2A participates in cadherin-mediated cell–cell adhesion. We show here that the core enzyme of PP2A (PP2A-AC) is localized in the cell–cell adhesion sites between adjacent cells and associated with the E-cadherin-catenins complex in non-malignant human mammary epithelial (HME) cells at confluence. Treatment of the cells with either okadaic acid (OA), an inhibitor of PP2A, or siRNA for the regulatory subunit A of PP2A (PP2A-A) caused disruption of cell–cell adhesion and F-actin assembly, without affecting the complex formation of E-cadherin with β- and α-catenins. While a small GTPase Rac and its effector IQGAP1 were associated with the E-cadherin-catenins complex, either OA or PP2A-A siRNA concomitantly induced the dissociation of IQGAP1, but not Rac, from the complex and the internalization of E-cadherin from the cell surface. We therefore propose that PP2A plays a crucial role in the maintenance of cell–cell adhesion through recruitment of IQGAP1 to the Rac-bound E-cadherin-catenins complex. J.Cell.Physiol. © 2005 Wiley-Liss, Inc. [ABSTRACT FROM AUTHOR]