The form of protein phosphatase-1 associated with hepatic glycogen (PP1G) was purified to near homogeneity from rat liver by affinity chromatography on microcystin-Sepharose and gel-filtration. The enzyme is a heterodimer consisting of the catalytic subunit of PP1 (the alpha and beta isoforms) complexed to a 33 kDa glycogen-binding (GL) subunit. The GL subunit binds phosphorylase a with high affinity, and is responsible for the enhanced dephosphorylation of glycogen synthase by PP1G and its allosteric inhibition by phosphorylase a.