The ability of Giardia lamblia to undergo two distinct differentiations in response to physiologic stimuli is central to its pathogenesis. The giardial cytoskeleton changes drastically during encystation and excystation. However, the signal transduction pathways mediating these transformations are poorly understood. We tested the hypothesis that PP2A, a highly conserved serine/threonine protein phosphatase, might be important in giardial differentiation. We found that in vegetatively growing trophozoites, gPP2A-C protein localizes to basal bodies/centrosomes, and to cytoskeletal structures unique to Giardia: the ventral disk, and the dense rods of the anterior, posterior-lateral, and caudal flagella. During encystation, gPP2A-C protein disappears from only the anterior flagellar dense rods. During excystation, gPP2A-C localizes to the cyst wall in excysting cysts but is not found in the wall of cysts with emerging excyzoites. Transcriptome and immunoblot analyses indicated that gPP2A-C mRNA and protein are upregulated in mature cysts and during the early stage of excystation that models passage through the host stomach. Stable expression of gPP2A-C antisense RNA did not affect vegetative growth, but strongly inhibited the formation of encystation secretory vesicles (ESV) and water-resistant cysts. Moreover, the few cysts that formed were highly defective in excystation. Thus, gPP2A-C localizes to universal cytoskeletal structures and to structures unique to Giardia. It is also important for encystation and excystation, crucial giardial transformations that entail entry into and exit from dormancy.