Mps1 is one of the several essential kinases whose activation is required for robust mitotic spindle checkpoint signalling. The activity of Mps1 is tightly regulated and increases dramatically during mitosis or in response to spindle damage. To understand the molecular mechanism underlying Mps1 regulation, we determined the crystal structure of the kinase domain of Mps1. The 2.7-A-resolution crystal structure shows that the Mps1 kinase domain adopts a unique inactive conformation. Intramolecular interactions between the key Glu residue in the C helix of the N-terminal lobe and the backbone amides in the catalytic loop lock the kinase in the inactive conformation. Autophosphorylation appears to be a priming event for kinase activation. We identified Mps1 autophosphorylation sites in the activation and the P+1 loops. Whereas activation loop autophosphorylation enhances kinase activity, autophosphorylation at the P+1 loop (T686) is associated with the active kinase. Mutation of T686 autophosphorylation site impairs both autophosphorylation and transphosphorylation. Furthermore, we demonstrated that phosphorylation of T676 may be a priming event for phosphorylation at T686. Finally, we identified two critical lysine residues in the loop between helices EF and F that are essential for substrate recruitment and maintaining high levels of kinase activity. Our studies reveal critical biochemical mechanisms for Mps1 kinase regulation.