Motuporin (I), a cyclic pentapeptide that is a potent protein phosphatase-1 inhibitor and cytotoxin, has been isolated from the marine sponge Theonella swinhoei collected in Papua New Guinea. The structure of motuporin was elucidated by spectroscopic analysis and chemical degradation. Marine sponges belonging to the genus Theonella are proving to be a rich source of biologically active cyclic peptides that usually contain at least one previously unknown amino acid. The Theonella peptides reported to date include orbiculamide A, keramamides B to D, cyclothoenamides A and B, theonellamide F, the theonellopeptolides, and theonellamine B. As part of an ongoing investigation of bioactive metabolites isolated from marine invertebrates collected in Papua New Guinea, it was found that crude extracts of the sponge Theonella swinhoei Gray inhibited protein phosphatase-1 even at extremely high dilution. Enzyme assay-guided fractionation of the crude extracts led to the isolation of motuporin (1), a novel cyclic pentapeptide. Motuporin (1) inhibits protein phosphatase-1 in a standard phosphorylase phosphatase assay at a concentration of <1 nmolar, making it one of the most potent PP1 inhibitors known, and it also displays considerable in vitro cytotoxicity against murine leukemia (P388: IC50 6 µg/mL), human lung (A549: IC50 2.4 µg/mL), ovarian (HEY: IC50 2.0 µg/mL), colon (LoVo: IC50 2.3 µg/mL), breast (MCF7: IC50 12.4 µg/mL) and brain (U373MG: IC50 2.4 µg/mL) cancer cell lines.