The Raf-MEK-ERK pathway couples growth factor, mitogenic and extracellular matrix signals to cell fate decisions such as growth, proliferation, migration, differentiation and survival. Raf-1 is a direct effector of the Ras GTPase and is the initiating kinase in this signalling cascade. Although Raf-1 activation is well studied, little is known about how Raf-1 is inactivated. Here, we used a proteomic approach to identify molecules that may inactivate Raf-1 signalling. Protein phosphatase 5 (PP5) was identified as an inactivator that associates with Raf-1 on growth factor stimulation and selectively dephosphorylates an essential activating site, Ser 338. The PP5-mediated dephosphorylation of Ser 338 inhibited Raf-1 activity and downstream signalling to MEK, an effect that was prevented by phosphomimetic substitution of Ser 338, or by ablation of PP5 catalytic function. Furthermore, depletion of endogenous PP5 increased cellular phospho-Ser 338 levels. Our results suggest that PP5 is a physiological regulator of Raf-1 signalling pathways.