Phosphoglycerate mutase 5 (PGAM5) is an atypical mitochondrial Ser/Thr phosphatase that modulates mitochondrial dynamics and participates in both apoptotic and necrotic cell death. The mechanisms that regulate the phosphatase activity of PGAM5 are poorly understood. The C-terminal PGAM domain of PGAM5 shares homology with the catalytic domains found in other members of the phosphoglycerate mutase family, including a conserved histidine that is absolutely required for catalytic activity. However, this conserved domain is not sufficient for maximal phosphatase activity. We have identified a highly conserved amino acid motif, WDxNWD, located within the unique N-terminal region, which is required for assembly of PGAM5 into large multimeric complexes. Alanine substitutions within the WDxNWD motif abolish the formation of multimeric complexes and markedly reduce phosphatase activity of PGAM5. A peptide containing the WDxNWD motif dissociates the multimeric complex and reduces but does not fully abolish phosphatase activity. Kinetic analysis of inhibition by the WDxNWD-containing peptide indicates a hyperbolic non-competitive mode of inhibition. Addition of the WDxNWD-containing peptide in trans to a mutant PGAM5 protein lacking the WDxNWD motif markedly increases phosphatase activity of the mutant protein. Our results are consistent with an intermolecular allosteric regulation mechanism for the phosphatase activity of PGAM5, in which the assembly of PGAM5 into multimeric complexes, mediated by the WDxNWD motif, results in maximal activation of phosphatase activity. Our results suggest the possibility of identifying small molecules that function as allosteric regulators of the phosphatase activity of PGAM5.