The study identifies the *PHO2* gene, an E2 ubiquitin-conjugating enzyme, as the Arabidopsis homolog of the human E2 APOLLON protein. *PHO2* is regulated by microRNA399 (miR399) and is involved in phosphate (Pi) signaling. In *pho2* mutants, Pi does not repress a set of Pi starvation-induced genes, including *AtHPS1*, *AT4*, and Pi transporters *Phl1*, *8*, and *Phl19*. Map-based cloning identified *PHO2* as *At2g33770*. Overexpression of miR399 in Pi-replete conditions represses *PHO2* expression and leads to high leaf Pi concentrations, phenocopying the *pho2* mutant. MiR399 primary transcripts are strongly induced by low Pi and rapidly repressed after Pi addition. *PHO2* transcripts change reciprocally to miR399 transcripts in Pi-deprived plants and in miR399 overexpressers. However, responses after Pi readdition and in β-glucuronide reporter lines suggest that *PHO2* expression is also regulated by Pi in a manner unrelated to miR399-mediated transcript cleavage. Expression of miR399 was strongly reduced in Pi-deprived *phr1* mutants, and a subset of Pi-responsive genes repressed in *phr1* mutants was up-regulated in Pi-replete *pho2* mutants. This places miR399 and *PHO2* in a branch of the Pi-signaling network downstream of *PHR1*. Putative *PHO2* orthologs containing five miR399-binding sites in their 5′-untranslated regions were identified in other higher plants, and Pi-dependent miR399 expression was demonstrated in rice, suggesting a conserved regulatory mechanism.The study identifies the *PHO2* gene, an E2 ubiquitin-conjugating enzyme, as the Arabidopsis homolog of the human E2 APOLLON protein. *PHO2* is regulated by microRNA399 (miR399) and is involved in phosphate (Pi) signaling. In *pho2* mutants, Pi does not repress a set of Pi starvation-induced genes, including *AtHPS1*, *AT4*, and Pi transporters *Phl1*, *8*, and *Phl19*. Map-based cloning identified *PHO2* as *At2g33770*. Overexpression of miR399 in Pi-replete conditions represses *PHO2* expression and leads to high leaf Pi concentrations, phenocopying the *pho2* mutant. MiR399 primary transcripts are strongly induced by low Pi and rapidly repressed after Pi addition. *PHO2* transcripts change reciprocally to miR399 transcripts in Pi-deprived plants and in miR399 overexpressers. However, responses after Pi readdition and in β-glucuronide reporter lines suggest that *PHO2* expression is also regulated by Pi in a manner unrelated to miR399-mediated transcript cleavage. Expression of miR399 was strongly reduced in Pi-deprived *phr1* mutants, and a subset of Pi-responsive genes repressed in *phr1* mutants was up-regulated in Pi-replete *pho2* mutants. This places miR399 and *PHO2* in a branch of the Pi-signaling network downstream of *PHR1*. Putative *PHO2* orthologs containing five miR399-binding sites in their 5′-untranslated regions were identified in other higher plants, and Pi-dependent miR399 expression was demonstrated in rice, suggesting a conserved regulatory mechanism.