K-Cl cotransport can participate in volume regulation in a number of cell types. Swelling activation of K-Cl cotransport in sheep erythrocytes proceeds by a two-step process, A<-->B<-->C (Dunham et al., J. Gen. Physiol. 101: 733-765, 1993). The A state, with a low flux, predominates at physiological volume. A-->B is rate limiting and can be activated by reducing cell Mg concentration ([Mg]c); complete activation (B-->C) requires cell swelling. Inhibitors of protein kinases and phosphatases were employed in an attempt to identify enzymatic reactions in the activation process. Staurosporine, a kinase inhibitor, activated K-Cl cotransport by approximately sixfold. Swelling of staurosporine-treated cells caused further activation that proceeded without delay. The effects of staurosporine and reducing [Mg]c were not additive. These two results indicate that staurosporine, like reducing [Mg]c, promotes the rate-limiting A-->B conversion. Unlike swelling, staurosporine activated cotransport without delay. Therefore staurosporine activates by promoting the forward reaction in the A<-->B conversions, in contrast to swelling, which activates by inhibiting the reverse reaction. Calyculin A, a phosphatase inhibitor, inhibited K-Cl cotransport but did not inhibit after activation by reducing [Mg]c, confirming earlier proposals that A-->B is promoted by a phosphatase. Calyculin A, added before or after staurosporine, abolished activation by staurosporine, confirming that staurosporine promotes A-->B. It is proposed that the phosphatase promoting this reaction is regulated by an inhibitory kinase, the staurosporine target.