We have used chemical synthesis, functional reconstitution, and electron paramagnetic resonance (EPR) to probe the functional dynamics of phospholamban (PLB), which regulates the Ca-ATPase (SERCA) in cardiac sarcoplasmic reticulum. The transmembrane domain of PLB inhibits SERCA at low [Ca(2+)], but the cytoplasmic domain relieves this inhibition upon Ser16 phosphorylation. Monomeric PLB was synthesized with Ala11 replaced by the 2,2,6,6-tetramethylpiperidine-1-oxyl-4-amino-4-carboxylic acid (TOAC) spin label, which reports peptide backbone dynamics directly. PLB was reconstituted into membranes in the presence or absence of SERCA. TOAC-PLB showed normal inhibitory function, which was reversed by phosphorylation at Ser16 or by micromolar [Ca(2+)]. EPR showed that the PLB cytoplasmic domain exhibits two resolved conformations, a tense T state that is ordered and a relaxed R state that is dynamically disordered and extended. PLB phosphorylation shifts this equilibrium toward the R state and makes it more dynamic (hyperextended). Phosphorylation strongly perturbs the dynamics of SERCA-bound PLB without dissociating the complex, while micromolar [Ca(2+)] has no effect on PLB dynamics. A lipid anchor synthetically attached to the N terminus of PLB permits Ca-dependent SERCA inhibition but prevents the phosphorylation-induced disordering and reversal of inhibition. We conclude that the relief of SERCA inhibition by PLB phosphorylation is due to an order-to-disorder transition in the cytoplasmic domain of PLB, which allows this domain to extend above the membrane surface and induce a structural change in the cytoplasmic domain of SERCA. This mechanism is distinct from the one that relieves PLB-dependent SERCA inhibition upon the addition of micromolar [Ca(2+)].