CPI-17 is a phosphorylation-dependent inhibitory protein for smooth muscle myosin phosphate, Phosphorylation at Thr(38), in vitro, by protein kinase C or Rho-kinase enhances the inhibitory potency toward myosin phosphatase, Phosphorylation of CPI-17 by protein kinase N (PKN), a fatty acid- and Rho-activated serine/threonine kinase, and its effect on smooth muscle myosin phosphatase activity were investigated. CPI-17 was phosphorylated by GST-PKN-CAT, a constitutively active GST-fusion fragment of PKN, to 1.46 mol of P/mol of CPI-17, in vitro, The K-m value of CPI-17 for PKN was 0.96 mu M. Phosphorylation of PKN dramatically increased the inhibitory effect of CPI-17 on myosin phosphatase activity. The major and inhibitory phosphorylation site was identified as Thr(38) using a point mutant of CPI-17 and a phosphorylation-state specific antibody. Thus, CPI-17 is a substrate of PKN and might be involved in the Ca2+ sensitization of smooth muscle contraction as a downstream effector of Rho and/or arachidonic acid.