Endogenous caldesmon kinase activity in sheep aorta smooth muscle was purified and characterized. The enzyme was identified as a proteolytic fragment of protein kinase C by cross-reactivity with anti-protein kinase C antibodies, autophosphorylation, substrate specificity and the primary structure of the sites of phosphorylation on caldesmon. The enzyme phosphorylated aorta caldesmon both in native thin filaments and in the isolated state. Up to 2.9 mols of phosphate per mol of caldesmon were transferred. Prolonged incubation of caldesmon with the kinase resulted in phosphorylation of Ser-127, Ser-587, Ser-600, Ser-657, Ser-686, and Ser-726 (numbering corresponds to chicken gizzard caldesmon sequence). Ser-600 and Ser-587 were the major sites of phosphorylation containing more than 30% of phosphate transferred. Phosphorylation did not significantly affect the interaction of caldesmon with Ca(2+)-calmodulin. However, phosphorylation of both intact caldesmon and of its C-terminal fragment (658C), containing residues 658-756, significantly decreased their ability to inhibit acto-heavy meromyosin ATPase. This seems to be partially due to a decrease in the binding of caldesmon and 658C to actin-tropomyosin and partly due to an uncoupling of the binding-inhibition relationship.