Signaling pathways regulating proliferation, differentiation, and apoptosis are commonly mediated through protein-protein interactions as well as reversible phosphorylation of proteins. To facilitate the study of regulated protein-protein interactions in cells and living animals, we optimized firefly luciferase protein fragment complementation by screening incremental truncation libraries of N- and C-terminal fragments of luciferase. Fused to the rapamycin-binding domain (FRB) of the kinase mammalian target of rapamycin and FK506-binding protein 12 (FKBP), respectively, the optimized FRB-N-terminal luciferase fragment (NLuc)/C-terminal luciferase fragment (CLuc)-FKBP luciferase complementation imaging (LCI) pair reconstituted luciferase activity in cells upon single-site binding of rapamycin in an FK506-competitive manner. LCI was used in three independent applications. In mice bearing implants of cells expressing the FRB-NLuc/CLuc-FKBP LCI pair, dose- and time-dependent luciferase activity allowed target-specific pharmacodynamic analysis of rapamycin-induced protein-protein interactions in vivo. In cells expressing a Cdc25C-NLuc/CLuc-14-3-3epsilon LCI pair, drug-mediated disruption of cell cycle regulated protein-protein interactions was demonstrated with the protein kinase inhibitor UCN-01 in a phosphoserine-dependent manner. When applied to IFN-gamma-dependent activation of Janus kinase/signal transducer and activator of transcription 1 (STAT1), LCI revealed, in the absence of ligand-induced phosphorylation, STAT1 proteins existing in live cells as preformed dimers. Thus, optimized LCI provides a platform for near real-time detection and characterization of regulated and small molecule-induced protein-protein interactions in intact cells and living animals and should enable a wide range of novel applications in drug discovery, chemical genetics, and proteomics research.