The Na(+)/H(+) exchanger NHE3 plays a central role in intravascular volume and acid-base homeostasis. Ion exchange activity is conferred by its transmembrane domain, while regulation of the rate of transport by a variety of stimuli is dependent on its cytosolic C-terminal region. Liposome- and cell-based assays employing synthetic or recombinant segments of the cytosolic tail demonstrated preferential association with anionic membranes, which was abrogated by perturbations that interfere with electrostatic interactions. Resonance energy transfer measurements indicated that segments of the C-terminal domain approach the bilayer. In intact cells, neutralization of basic residues in the cytosolic tail by mutagenesis or disruption of electrostatic interactions inhibited Na(+)/H(+) exchange activity. An electrostatic switch model is proposed to account for multiple aspects of the regulation of NHE3 activity.