After anion-exchange chromatography, the soluble fraction of a cell-free extract of Saccharomyces cerevisiae showed two phosphatase activity peaks when P-nitrophenyl phosphate (pNPP) was used as the substrate. However, only the second pNPP active peak demonstrated the ability to convert farnesyl diphosphate (FPP) into E,E-farnesol. N-terminal sequence analysis of the purified pNPP/FPP phosphatase revealed that it was a truncated form of alkaline phosphatase Pho8 lacking 62 amino acids from the N-terminus and was designated Pho8 Delta 62. Although other isoprenyl diphosphates such as geranyl diphosphate (GPP) and geranylgeranyl diphosphate (GGPP) could also be hydrolyzed by Pho8 Delta 62 to the corresponding alcohols, selectivity was observed among these substrates. The optimum pH was 7.0 for all three isoprenyl diphosphate substrates. Although lower hydrolytic activity was observed for FPP and GGPP at pH 6.0 and 8.5, hydrolysis of GPP was observed only at pH 7.0. Mg2+ and Mn2+ inhibited hydrolysis of FPP and GGPP, and GGPP was more sensitive to Mg2+ inhibition than FPP. The rate of FPP hydrolysis increased in the presence of Triton X-100.