Inactive phosphatase which acts redundantly with egg-4 in the oocyte-to-zygote transition (PubMed:19879842, PubMed:19879147). Required for polarized cortical actin cytoskeleton rearrangement in the oocyte before and after fertilization (PubMed:19879147). Together with egg-4, required for the cortical localization of kinase mbk-2 in maturing oocyte until the end of meiosis I (PubMed:19879842). Also required for kinase mbk-2, pseudophosphatase egg-3 and chitin synthase chs-1 localization to cytoplasmic foci after fertilization (PubMed:19879147). Part of a complex, consisting of pseudophosphatases egg-3, egg-4, egg-5 and kinase mbk-2; this complex is required for the oocyte-to-zygote transition. Interacts (via tyrosine-protein phosphatase domain) with kinase mbk-2 (via 'Tyr-619' and 'Tyr-621'); mbk-2 tyrosine phosphorylation enhances the interaction. Localizes to the cell cortex in developing oocytes and in newly fertilized embryos. Severe reduction in the number of hatched larvae (PubMed:19879147). Simultaneous RNAi-mediated knockdown of egg-5 results in no viable progeny and causes endomitosis in the uterus, generation of polyspermic embryos and defects in meiosis completion, polar body formation and eggshell chitin layer formation (PubMed:19879147). In addition, posterior formation of F-actin cap at the cortex oocyte and its polarized dispersal after fertilization are impaired (PubMed:19879147). Prevents mbk-2 localization to the unfertilized oocyte cortex without affecting egg-3 cortical localization (PubMed:19879842, PubMed:19879147). Prevents mbk-2, egg-3 and chs-1 re-localization to cytoplasmic foci at meiosis anaphase I (PubMed:19879147). Simultaneous RNAi-mediated knockdown of egg-5 and mel-26 causes premature phosphorylation of mei-1, a mbk-1 substrate, during oocyte maturation (PubMed:19879842). Belongs to the protein-tyrosine phosphatase family. The active site Cys-600 is replaced by a Asp residue suggesting that egg-5 may lack catalytic activity. Despite the lack of catalytic activity, egg-5 may retain the capacity to bind to phosphorylated substrates.