Circadian rhythms in Drosophila require cycling of the protein products of two major clock genes period ( per) and timeless. Cyclic expression of per and tim is executed by a feedback loop, in which PER and TIM inhibit their own transcription by repressing transcriptional activators CLOCK (CLK) and CYCLE (CYC). In the absence of rhythmic transcription, PER and TIM protein levels can still oscillate and drive behavioral rhythms. This suggests that post-translational regulation, such as cyclic phosphorylation of PER and TIM, plays an important role in the time-keeping mechanism of the clock. While the function of the clock kinases has been intensively characterized, little is know about the potential action of protein phosphatases in the clock. In this work, we studied protein phosphatase 1 (PP1), a major protein phosphatase, using behavioral, genetic, pharmacological, and biochemical approaches, and demonstrated an essential role of PP1 in maintaining a functional clock in Drosophila. Flies with reduced PP1 activity exhibit lengthened circadian period, reduced amplitude of behavioral rhythms, and an altered response to light. At a molecular level, we found that PP1 interacts with and dephosphorylates TIM, which regulates TIM stability in clock neurons. At the end, we examined the mechanism of the long-known stabilizing effect of TIM on PER, which likely involves the phosphatase activity of PP1. Overall, this study has led to a better understanding of the post-translational regulation of the Drosophila circadian clock.