OBJECTIVE Phosphatase inhibitor-1 (I-1) is a conditional amplifier of beta-adrenergic signalling downstream of protein kinase A by inhibiting type-1 phosphatases only in its PKA-phosphorylated form. I-1 is downregulated in failing hearts and thus contributes to beta-adrenergic desensitization. It is unclear whether this should be viewed as a predominantly adverse or protective response. RESULTS We generated transgenic mice with cardiac-specific I-1 overexpression (I-1-TG) and evaluated cardiac function and responses to catecholamines in mice with targeted disruption of the I-1 gene (I-1-KO). Both groups were compared with their wild-type (WT) littermates. I-1-TG developed cardiac hypertrophy and mild dysfunction which was accompanied by a substantial compensatory increase in PP1 abundance and activity, confounding cause-effect relationships. I-1-KO had normal heart structure with mildly reduced sensitivity, but unchanged maximal contractile responses to beta-adrenergic stimulation, both in vitro and in vivo. Notably, I-1-KO were partially protected from lethal catecholamine-induced arrhythmias and from hypertrophy and dilation induced by a 7 day infusion with the beta-adrenergic agonist isoprenaline. Moreover, I-1-KO exhibited a partially preserved acute beta-adrenergic response after chronic isoprenaline, which was completely absent in similarly treated WT. At the molecular level, I-1-KO showed lower steady-state phosphorylation of the cardiac ryanodine receptor/Ca(2+) release channel and the sarcoplasmic reticulum (SR) Ca(2+)-ATPase-regulating protein phospholamban. These alterations may lower the propensity for diastolic Ca(2+) release and Ca(2+) uptake and thus stabilize the SR and account for the protection. CONCLUSIONS Taken together, loss of I-1 attenuates detrimental effects of catecholamines on the heart, suggesting I-1 downregulation in heart failure as a beneficial desensitization mechanism and I-1 inhibition as a potential novel strategy for heart failure treatment.