In human cells infected with herpes simplex virus 1 the double-stranded RNA-dependent protein kinase (PKR) is activated but phosphorylation of the α subunit of eukaryotic translation initiation factor 2 (eIF-2) and total shutoff of protein synthesis is observed only in cells infected with γ₁z34.5⁻ mutants. The carboxyl-terminal 64 aa of γ₁34.5 protein are homologous to the corresponding domain of MyD116, the murine growth arrest and DNA damage gene 34 (GADD34) protein and the two domains are functionally interchangeable in infected cells. This report shows that (i) the carboxyl terminus of MyD116 interacts with protein phosphatase 1α in yeast, and both MyD116 and γ₁34.5 interact with protein phosphatase 1α in vitro; (ii) protein synthesis in infected cells is strongly inhibited by okadaic acid, a phosphatase 1 inhibitor; and (iii) the α subunit in purified eIF-2 phosphorylated in vitro is specifically dephosphorylated by S10 fractions of wild-type infected cells at a rate 3000 times that of mock-infected cells, whereas the eIF-2α-P phosphatase activity of γ₁34.5⁻ virus infected cells is lower than that of mock-infected cells. The eIF-2α-P phosphatase activities are sensitive to inhibitor 2. In contrast to eIF-2α-P phosphatase activity, extracts of mock-infected cells exhibit a 2-fold higher phosphatase activity on [³²P]phosphorylase than extracts of infected cells. These results indicate that in infected cells, γ₁34.5 interacts with and redirects phosphatase to dephosphorylate eIF-2α to enable continued protein synthesis despite the presence of activated PKR. The GADD34 protein may have a similar function in eukaryotic cells. The proposed mechanism for maintenance of protein synthesis in the face of double-stranded RNA accumulation is different from that described for viruses examined to date.