Urokinase synthesized by human A431 epidermoid carcinoma cells is phosphorylated on serine (Mastronicola, M. R., Stoppelli, M. P., Migliaccio, A., Auricchio, F., and Blasi, F. (1990) FEBS Lett. 266, 109-114). To test the possibility that phosphorylation may have specific effects on urokinase function, the phosphorylated and nonphosphorylated forms of urokinase were separated by Fe(3+)-Sepharose chromatography. Both forms exhibit indistinguishable Km and kcat for plasminogen activation. On the other hand, their sensitivity toward the specific plasminogen activator inhibitor type 1 is different as assessed by measuring both the stability of the covalent complex and the residual enzymatic activity. Phosphorylated urokinase was 50% inhibited at a concentration of plasminogen activator inhibitor type 1 4-fold higher than nonphosphorylated urokinase (0.7 versus 0.15 nM). Furthermore about 10% of phosphorylated urokinase was resistant to plasminogen activator inhibitor type 1 at a concentration as high as 20 nM. Thus, phosphorylation affects urokinase sensitivity to plasminogen activator inhibitor type 1, therefore resulting in a net, although indirect, increase of urokinase activity. These results suggest the existence of a novel cellular regulatory mechanism of extracellular proteolysis.