Protein kinase C is processed by three phosphorylation events before it is competent to respond to second messengers. Specifically, the enzyme is first phosphorylated at the activation loop by another kinase, followed by two ordered autophosphorylations at the carboxyl terminus (Keranen, L, M,, Dutil, E, M,, and Newton, A. C, (1995) Curr, Biol, 5, 1394-1403). This study examines the role of negative charge at the first conserved carboxyl-terminal phosphorylation position, Thr-641, in regulating the function and subcellular localization of protein kinase C beta II Mutation of this residue to Ala results in compensating phosphorylations at adjacent sites, so that a triple Ala mutant was required to address the function of phosphate at Thr-641, Biochemical and immunolocalization analyses of phosphorylation site mutants reveal that negative charge at this position is required for the following: 1) to process catalytically competent protein kinase C; 2) to allow autophosphorylation of Ser-660; 3) for cytosolic localization of protein kinase C; and 4) to permit phorbol ester-dependent membrane translocation. Thus, phosphorylation of Thr-641 in protein kinase C beta II is essential for both the catalytic function and correct subcellular localization of protein kinase C, The conservation of this residue in every protein kinase C isozyme, as well as other members of the kinase superfamily such as protein kinase A, suggests that carboxyl-terminal phosphorylation serves as a key molecular switch for defining kinase function.