G-protein beta gamma-subunits (G(beta gamma)) are active transmembrane signalling components, Their function recently has been observed to be regulated by the cytosolic protein phosducin, We show here that a small fragment (amino acids 215-232) contained in the C-terminus of phosducin is sufficient for high-affinity interactions with G(beta gamma). Corresponding peptides not only disrupt G(beta gamma)/G(alpha) interactions, as defined by G(beta gamma)-stimulated GTPase activity of alpha(0), but also other G(beta gamma)-mediated functions, The NMR structure of a peptide encompassing this region shows a loop exposing the side chains of Glu223 and Tyr224, and peptides with a substitution of either of these amino acids show a complete loss of activity towards G(0). Mutation of this Tyr224 to Ala in full-length phosducin reduced the functional activity of phosducin to that of phosducin's isolated N-terminus, indicating the importance of this residue within the short, structurally defined C-terminal segment, This small peptide derived from phosducin may represent a model of a G(beta gamma) inhibitor, and illustrates the potential of small compounds to affect G(beta gamma) functions.