In eukaryotes, a key step in the initiation of translation is the binding of the eukaryotic initiation factor 4E (eIF4E) to the cap structure of the mRNA. Subsequent recruitment of several components, including the small ribosomal subunit, is thought to allow migration of initiation complexes and recognition of the initiation codon. Mitogens and cytokines stimulate the phosphorylation of eIF4E at Ser(209), but the functional consequences of this modification have remained a major unresolved question. Using fluorescence spectroscopy and surface plasmon resonance techniques, we show that phosphorylation of eIF4E markedly reduces its affinity for capped RNA, primarily due to an increased rate of dissociation. Variant eIF4E proteins harboring negatively charged acidic residues at position 209 also showed decreased binding to capped RNA. Furthermore, a basic residue at position 159 was shown to be essential for cap binding. Although eIF4E-binding protein 1 greatly stabilized binding of phosphorylated eIF4E to capped RNA, in the presence of eIF4E-binding protein 1 the phosphorylated form still dissociated faster compared with nonphopshorylated eIF4E. The implications of our findings for the mechanism of translation initiation are discussed.