ARPP-21 is a cyclic AMP-regulated phosphoprotein of M(r) 21 kDa that is enriched in the cell bodies and terminals of medium-sized spiny neurons in the basal ganglia. Using a new phosphorylation state-specific antibody selective for the detection of ARPP-21 phosphorylated on Ser(55), we have demonstrated that activation of dopamine D1 receptors increased the level of ARPP-21 phosphorylation in mouse striatal slices. Conversely, activation of D2 receptors caused a large decrease in ARPP-21 phosphorylation. Treatment of mice with either methamphetamine or cocaine resulted in increased ARPP-21 phosphorylation in vivo. Studies using specific inhibitors of protein phosphatases and experiments in mice bearing a targeted deletion of the gene for DARPP-32, a dopamine-activated inhibitor of protein phosphatase-1, indicated that protein phosphatase-2A is primarily responsible for dephosphorylation of ARPP-21 in mouse striatum. These results demonstrate that phosphorylation and dephosphorylation of ARPP-21 are tightly regulated in the striatum. We speculate that ARPP-21 might mediate some of the physiologic effects of dopamine and certain drugs of abuse in the basal ganglia.