The substrate specificity determinants of protein kinase C are probed using synthetic peptides encompassing the major phosphorylation site serine 115 in bovine MBP. The results indicate that basic residues arginine 107 and 113 N-terminal to the phosphorylation site are essential for the substrate activity of the peptides. Substitutions of these basic residues by alanine cause a marked decrease in their substrate activity and the resulting peptide analogs become specific and rather potent inhibitors of protein kinase C. Leukemic cells are particularly abundant in protein kinase C and its substrate proteins, and the enzyme system has been shown to play a key role in cell growth. The agents that stimulate protein kinase C include tumor promoting phorbol esters (such as TPA) and mezerein, and the putative second messenger diacylglycerol. Many antineoplastic agents, on the other hand, inhibit the enzyme which include adriamycin, tamoxifen, alkyl-lysophospholipid, selenium, retinal and lipoidal amine CP-46, 665-1. Immunocytochemical studies of protein kinase C in leukemic cells indicate that it is localized in the plasma membrane, cytoplasm, nucleus and Golgi apparatus, and the subcellular distribution of the enzyme might be related to the phases of the cell cycle. TPA induces translocation of the enzyme to plasma membrane, suggesting an additional mode of action for the tumor promotor.