• Overexpression of AtPAP2, a purple acid phosphatase (PAP) with a unique C-terminal hydrophobic motif in Arabidopsis, resulted in earlier bolting and a higher seed yield. Metabolite analysis showed that the shoots of AtPAP2 overexpression lines contained higher levels of sugars and tricarboxylic acid (TCA) metabolites. Enzyme assays showed that sucrose phosphate synthase (SPS) activity was significantly upregulated in the overexpression lines. The higher SPS activity arose from a higher level of SPS protein, and was independent of SnRK1. • AtPAP2 was found to be targeted to both plastids and mitochondria via its C-terminal hydrophobic motif. Ectopic expression of a truncated AtPAP2 without this C-terminal motif in Arabidopsis indicated that the subcellular localization of AtPAP2 is essential for its biological actions. • Plant PAPs are generally considered to mediate phosphorus acquisition and redistribution. AtPAP2 is the first PAP shown to modulate carbon metabolism and the first shown to be dual-targeted to both plastids and mitochondria by a C-terminal targeting signal. • One PAP-like sequence carrying a hydrophobic C-terminal motif could be identified in the genome of the smallest free-living photosynthetic eukaryote, Ostreococcus tauri. This might reflect a common ancestral function of AtPAP2-like sequences in the regulation of carbon metabolism.