Although protein phosphatases appear to be highly controlled in intact cells, relatively little is known about the physiological regulation of their activity. DARPP-32, a dopamine- and cAMP-regulated phosphoprotein of apparent M(r) 32,000, is phosphorylated in vitro by casein kinase I, casein kinase II, and cAMP-dependent protein kinase on sites phosphorylated in vivo. DARPP-32 phosphorylated on Thr-34 by cAMP-dependent protein kinase is a potent inhibitor of protein phosphatase 1 and an excellent substrate for calcineurin, a Ca2+/calmodulin-dependent protein phosphatase. Here we provide evidence, using both purified proteins and brain slices, that phosphorylation of DARPP-32 on Ser-137 by casein kinase I inhibits the dephosphorylation of Thr-34 by calcineurin. This inhibition occurs only when phospho-Ser-137 and phospho-Thr-34 are located on the same DARPP-32 molecule and is not dependent on the mode of activation of calcineurin. The results demonstrate that the inhibition is due to a modification in the properties of the substrate which alters its dephosphorylation rate. Thus, casein kinase I may play a physiological role in striatonigral neurons as a modulator of the regulation of protein phosphatase 1 via DARPP-32.