Na(+)-K(+)-2Cl- cotransport in aortic endothelial cells is activated by cell shrinkage, inhibited by cell swelling, and is responsible for recovery of cell volume. The role of protein phosphorylation in the regulation of cotransport was examined with two inhibitors of protein phosphatases, okadaic acid and calyculin, and a protein kinase inhibitor, K252a. Both phosphatase inhibitors stimulated cotransport in isotonic medium, with calyculin, a more potent inhibitor of protein phosphatase I, being 50-fold more potent. Neither agent stimulated cotransport in hypertonic medium. Stimulation by calyculin was immediate and was complete by 5 min, with no change in cell Na + K content, indicating that the stimulation of cotransport was not secondary to cell shrinkage. The time required for calyculin to activate cotransport was longer in swollen cells than in normal cells, indicating that the phosphorylation step is affected by cell volume. Activation of cotransport when cells in isotonic medium were placed in hypertonic medium was more rapid than the inactivation of cotransport when cells in hypertonic medium were placed in isotonic medium, which is consistent with a shrinkage-activated kinase rather than a shrinkage-inhibited phosphatase. K252a, a nonspecific protein kinase inhibitor, reduced cotransport in both isotonic and hypertonic media. The rate of inactivation was the same in either medium, indicating that dephosphorylation is not regulated by cell volume. These results demonstrate that Na(+)-K(+)-2Cl- cotransport is activated by protein phosphorylation and is inactivated by a Type I protein phosphatase. The regulation of cotransport by volume is due to changes in the rate of phosphorylation rather than dephosphorylation, suggesting the existence of a volume-sensitive protein kinase. Both the kinase and the phosphatase are constitutively active, perhaps to allow for rapid changes in cotransport activity.