Molecular cloning of glycogen synthase kinase-3 (GSK-3) has demonstrated the existence of a novel form, termed GSK-3 beta, which is highly related to the well characterised GSK-3 alpha protein but derived from a distinct gene. The cDNA cloning also revealed a striking degree of amino acid identity between the two GSK-3 proteins, particularly the beta-form, and the zeste-white3/shaggy (zw3sgg) homeotic gene of Drosophila melanogaster. Abrogation of zw3sgg causes pleiotropic effects on fruitfly development affecting segmental organisation and cell fate determination. In view of the potential importance of GSK-3 beta in mammalian development and the lack of previous characterisation, we have expressed this protein in insect cells using recombinant baculovirus. A rapid purification scheme has been developed yielding essentially pure GSK-3 beta protein in three chromatographic steps. The protein has autonomous protein kinase activity and similar, but not identical, substrate preferences to GSK-3 alpha. Both GSK-3 proteins activate the MgATP-dependent form of protein phosphatase-1 and thus display 'factor A' activity. Since GSK-3 beta exhibits an identical site specificity to GSK-3 alpha with respect to phosphorylation of the proto-oncogene/transcription factors c-jun and c-myc, it is likely that the Drosophila zw3sgg protein kinase has a similar specificity for such transcription factors which may underlie the pleiotropic phenotypes observed when the Drosophila homologue is mutationally inactivated.