Brassinosteroids (BRs) are plant steroid hormones sensed by the membrane receptor kinase BRI1. Activation of BRI1 leads to the dephosphorylation of BZR1/BES1 transcription factors. Overexpression of the Kelch phosphatase BRI1 SUPPRESSOR 1 (BSU1) rescued the growth defects of bri1 mutants. Subsequent studies identified BSU1 as a protein tyrosine phosphatase, which promotes BR signaling by dephosphorylating a phosphotyrosine in the glycogen synthase kinase 3 BIN2. Crystal structures of the BSU1 phosphatase domain now reveal a high degree of structural similarity to protein phosphatase 1 (PP1), a eukaryotic serine/threonine phosphatase. Consistently, BSU1 efficiently dephosphorylated phosphothreonine- and phosphoserine-containing substrate peptides, but showed no detectable activity toward BIN2 and other phosphotyrosine substrates. A catalytically inactive BSU1 phosphatase domain suppresses the growth phenotypes of the Arabidopsis bri1-5 mutant and binds the BSU1 homologs BSL1-3. bsu1 and bsu1 bsl1 bsl2/3 loss-of-function mutants display wild-type-like BR responses, but exhibit stomatal patterning and fertility defects. Importantly, the PP1-like C-terminal tail of BSU1 is phosphorylated at Thr785 by a cyclin-dependent kinase complex. The phosphorylated tail binds to the BSU1 substrate-binding grooves, blocking access to the active site. Mutation of Thr785 to alanine activates BSU1, suggesting that Kelch phosphatases and PP1 share a common regulatory mechanism. Deletion of the Marchantia polymorpha Kelch phosphatase MpBSLM results in an undifferentiated cell mass phenotype, associated with the overactivation of a cell cycle reporter. Taken together, our experiments suggest that plant Kelch phosphatases act as PP1-like cell cycle regulators, rather than as tyrosine phosphatases in BR signaling.