Cellular functions of protein phosphatase-1 (PP1), a major eukaryotic serine/threonine phosphatase, are defined by the association of PP1 catalytic subunits with endogenous protein inhibitors and regulatory subunits. Many PP1 regulators share a consensus RVXF motif, which docks within a hydrophobic pocket on the surface of the PP1 catalytic subunit. Although these regulatory proteins also possess additional PP1-binding sites, mutations of the RVXF sequence established a key role of this PP1-binding sequence in the function of PP1 regulators. WT PP1alpha, the C-terminal truncated PP1alpha-(1-306), a chimeric PP1alpha containing C-terminal sequences from PP2A, another phosphatase, PP1alpha-(1-306) with the RVXF-binding pocket substitutions L289R, M290K, and C291R, and PP2A were analyzed for their regulation by several mammalian proteins. These studies established that modifications of the RVXF-binding pocket had modest effects on the catalytic activity of PP1, as judged by recognition of substrates and sensitivity to toxins. However, the selected modifications impaired the sensitivity of PP1 to the inhibitor proteins, inhibitor-1 and inhibitor-2. In addition, they impaired the ability of PP1 to bind neurabin-I, the neuronal regulatory subunit, and G(M), the skeletal muscle glycogen-targeting subunit. These data suggested that differences in RVXF interactions with the hydrophobic pocket dictate the affinity of PP1 for cellular regulators. Substitution of a distinct RVXF sequence in inhibitor-1 that enhanced its binding and potency as a PP1 inhibitor emphasized the importance of the RVXF sequence in defining the function of this and other PP1 regulators. Our studies suggest that the diversity of RVXF sequences provides for dynamic physiological regulation of PP1 functions in eukaryotic cells.