We have previously isolated a form of protein phosphatase-1 (PP1M) from avian smooth muscle myofibrils that is composed of the catalytic subunit of PP1 (PP1C) bound to an M-complex consisting of 110-kDa (M110) and 21-kDa (M21) subunits. The interaction of PP1C with an N-terminal region of the M110 subunit enhances the dephosphorylation of myosin and suppresses the dephosphorylation of other substrates [Alessi, D. R., MacDougall, L. K., Sola, M. M., Ikebe, M. & Cohen, P. (1992) Eur. J. Biochem. 210, 1023-1035; Chen, Y. H., Chen, M. X., Alessi, D. R., Campbell, D. G., Shanahan, C., Cohen, P. & Cohen, P. T. W. (1994) FEBS Lett. 356, 51-56; Johnson, D. F., Moorhead, G., Caudwell, F. B., Cohen, P., Chen, Y. H., Chen, M. X. & Cohen, P. T. W. (1996) Eur. J. Biochem. 239, 317-325]. In this paper, we establish that PP1M accounts for nearly all the myosin phosphatase activity in myofibrils, that the M110 and M21 subunits are present at similar concentrations in the myofibrillar fraction, and that these subunits are entirely bound to PP1. We demonstrate that the M21 subunit does not interact with PP1C, but with the C-terminal 72 residues of the M110 subunit, a region which is 43% identical to residues 87-161 of the M21 subunit. A fragment of the M21 subunit, M21-(M1-L146), which lacks the C-terminal leucine zipper, also bound to the M110 subunit, but two other fragments M21-(M1-E110) and M21-(E110-K186) did not. The M110 and M21 subunits were both found to be myosin-binding proteins. The C-terminal 291 residues of the M110 subunit, but not the C-terminal 72 residues, bound to myosin, but the N-terminal fragments M110-(M1-E309) and M110-(M1-S477) did not. Thus, the region of the M110 subunit that stimulates the dephosphorylation of myosin by PP1C is distinct from the region that targets PP1M to myosin. Remarkably, each myosin dimer was capable of binding about 20 mol M21 subunit and many of the M21-binding sites were located in the myosin rod domain. The potential significance of this observation is discussed.