DUSP5 is an inducible, nuclear, dual-specificity phosphatase, which specifically interacts with and inactivates the ERK1/2 MAP kinases in mammalian cells. In addition, expression of DUSP5 causes nuclear translocation of ERK2 indicating that it may act as a nuclear anchor for the inactive kinase. Here we show that induction of DUSP5 mRNA and protein in response to growth factors is dependent on ERK1/2 activation and that the accumulation of DUSP5 protein is regulated by rapid proteasomal degradation. DUSP5 is phosphorylated by ERK1/2 both in vitro and in vivo on three sites (Thr321, Ser346 and Ser376) within its C-terminal domain. DUSP5 phosphorylation is absolutely dependent on the conserved kinase interaction motif (KIM) within the amino-terminal domain of DUSP5, indicating that the same protein-protein contacts are required for both the inactivation of ERK2 by DUSP5 and for DUSP5 to act as a substrate for this MAPK. Using a combination of pharmacological inhibitors and phospho-site mutants we can find no evidence that phosphorylation of DUSP5 by ERK2 significantly affects either the half-life of the DUSP5 protein or its ability to bind to, inactivate or anchor ERK2 in the nucleus. However, co-expression of ERK2 results in significant stabilisation of DUSP5, which is accompanied by reduced levels of DUSP5 ubiquitination. These changes are independent of ERK2 kinase activity but absolutely depend on the ability of ERK2 to bind to DUSP5. We conclude that DUSP5 is stabilised by complex formation with its physiological substrate and that this may reinforce its activity as both a phosphatase and nuclear anchor for ERK2.