Calmodulin-dependent protein phosphatase isolated from bovine brain consists of a catalytic subunit A (Mr = 60,000) and a regulatory subunit B (Mr = 19,000) present in equal molar ratios. The two subunits were dissociated by gel filtration in 6 M urea and reconstituted to investigate the role of calmodulin and subunit B in regulating the phosphatase activity of subunit A. The activity of subunit A was stimulated 2-fold by calmodulin, 13-fold by subunit B, and 21-fold by both, indicating that the effects of both were synergistic. Maximum stimulation by calmodulin was observed at a calmodulin to subunit A molar ratio of 2:1 in the presence or absence of subunit B, whereas that by subunit B was observed at a B to A molar ratio of 3:1 in the presence or absence of calmodulin. Calmodulin and subunit B increased the Vmax of subunit A 2- and 5-fold, respectively, but had little effect on the Km for casein. The specific activity of the phosphatase reconstituted from subunits A and B reached 86% that of the native enzyme, whereas that of the holoenzyme reached 90%. Subunit B, even though similar to calmodulin in many respects, did not stimulate the activity of native phosphatase, suggesting that it cannot substitute for calmodulin. Limited trypsinization of subunit A increased its catalytic activity to the level observed with calmodulin; and this activity was further stimulated by subunit B but not by calmodulin. These results indicate that subunit A of phosphatase contains one catalytic domain and two distinct regulatory domains, one for calmodulin, and another for subunit B, that these two proteins do not substitute for one another and that they stimulate subunit A synergistically.