ABSTRACT Phosphorylation is one of the most ubiquitous, reversible posttranslational modifications in cells. The enzymes responsible for controlling the phosphorylation state of the cell are kinases, which catalyze the transfer of the ?-phosphate moiety of ATP to substrates, and phosphatases, which catalyze the reverse hydrolysis reaction, the removal of the phosphate moiety from phosphorylated substrates. Thus, phosphatases dynamically reverse the effects of kinases. Because phosphorylation is critical for all biological processes from cell growth to differentiation to development, the location and duration of the reciprocal actions of kinases and phosphatases must be exquisitely regulated both temporally and spatially within the cell. Consequently, when this tight regulation is disrupted, dysregulation of phosphorylation signaling ensues and the consequence is most often disease. Here we are investigating the cellular assembly of the serine/threonine protein phosphatase 1 (PP1). The regulatory protein SDS22 and the inhibitor-3 (I-3) have been proposed to be critical for this process, by functioning in a chaperone-like fashion. Using biochemistry and structural biology we show that this model is incorrect. Rather SDS22 and I-3 can individually function as a PP1 inhibitor. However, SDS22 inhibits PP1 via a completely novel mechanism. As we show, SDS22 unexpectedly distorts the PP1 active site so substrates can no longer bind. Thus as long as SDS22 is bound to PP1, PP1 is inactive. I-3 binds metals and thus can transport metals, which are necessary for PP1 activity, to the PP1 active site. Upon metal loading, I-3 is released in a p37-dependent manner from PP1. However, despite I-3 metal-loading, SDS22 continues to maintain PP1 in an inactive state. Thus, SDS22 is the key regulator of PP1 activity in cells. The presented research project uses a powerful integrated approach that combines X-ray crystallography and NMR spectroscopy with biochemical and cell biology experiments to obtain novel insights into the molecular mechanisms used by these regulators to control PP1 activity. We will: 1) determine the structures of the regulators in their free forms, 2) determine the structures of the PP1 dimeric and trimeric holoenzymes and 3) determine how these essential complexes direct and regulate PP1 signaling in cells. We will then leverage these structures to elucidate, at a molecular level, the biological functions and modes of action of these key PP1 holoenzymes. Because PP1 holoenzymes have critical roles in human diseases, the proposed work will provide novel strategies for selectively inhibiting PP1 activity by targeting the PP1 holoenzyme formation and subunit exchange, which is essential for understanding how distinct PPPs contribute to disease.