Using site-directed mutagenesis, we proposed that an autoinhibitory domain(s) is located at the C-terminal region (301-386) of the phosphorylase kinase gamma-subunit (Huang, C.-Y.F., Yuan C.-J., Livanova, N.B., and Graves, D.J. (1993) Mol. Cell. Biochem. 127/128, 7-18). Removal of the putative inhibitory domain(s) by truncation results in the generation of a constitutively active and calmodulin-independent form, gamma 1-300. To probe the structural basis of autoinhibition of gamma-subunit activity, two synthetic peptides, PhK13 (gamma 303-327) and PhK5 (gamma 343-367), corresponding to the two calmodulin-binding regions, were assayed for their ability to inhibit gamma 1-300. Competitive inhibition of gamma 1-300 by PhK13 was found versus phosphorylase b (Ki = 1.8 microM) and noncompetitive inhibition versus ATP. PhK5 showed noncompetitive inhibition with respect to both phosphorylase b and ATP. Calmodulin released the inhibition caused by both peptides. These results indicate that there are two distinct auto-inhibitory domains within the C terminus of the gamma-subunit and that these two domains overlap with the calmodulin-binding regions. Two mutant forms of gamma 1-300, E111K and E154R, were used to probe the enzyme-substrate-binding region using peptide substrate analogs corresponding to residues 9-18 of phosphorylase b (KRK11Q12ISVRGL). The data suggest that Glu111 interacts with the P-3 position of the substrate (Lys11) and Glu154 interacts with the P-2 site (Gln12). Both E111K and E154R were competitively inhibited with respect to phosphorylase b by PhK13, with 14- and 8-fold higher Ki values, respectively, than that observed with the wild-type enzyme. These data are consistent with a model for the regulation of the gamma-subunit of phosphorylase kinase in which PhK13 acts as a competitive pseudosubstrate that directly binds the substrate binding site of the gamma-subunit (Glu111 and Glu154).