Inhibitor-2 (I-2) is the regulatory subunit of a cytosolic type 1 Ser/Thr protein phosphatase (PP1) and potently inhibits the activity of the free catalytic subunit (CS1). Previous work from the laboratory had proposed that the interaction of I-2 with CS1 involved multiple sites (Park, I. K., and DePaoli-Roach, A. A. (1994) J. Biol. Chem. 269, 28919-28928). The present study refines the earlier analysis and arrives at a more detailed model for the interaction between I-2 and CS1. Although the NH(2)-terminal I-2 regions containing residues 1-35 and 1-64 have no inhibitory activity on their own, they increase the IC(50) for I-2 by approximately 30-fold, indicating the presence of a CS1-interacting site. Based on several experimental approaches, we have also identified the sequence Lys(144)-Leu-His-Tyr(147) as a second site of interaction that corresponds to the RVXF motif present in many CS1-binding proteins. The peptide I-2(135-151) significantly increases the IC(50) for I-2 and attenuates CS1 inhibition. Replacement of Leu and Tyr with Ala abolishes the ability to counteract inhibition by I-2. The I-2(135-151) peptide, but not I-2(1-35), also antagonizes inhibition of CS1 by DARPP-32 in a pattern similar to that of I-2. Furthermore, a peptide derived from the glycogen-binding subunit, R(GL)/G(M)(61-80), which contains a
consensus CS1-binding motif, completely counteracts CS1 inhibition by I-2 and DARPP-32. The NH(2)-terminal 35 residues of I-2 bind to CS1 at a site that is specific for I-2, whereas the KLHY sequence interacts with CS1 at a site shared with other interacting proteins. Other results suggest the presence of yet more sites of interaction. A model is presented in which multiple \"anchoring interactions\" serve to position a segment of I-2 such that it sterically occludes the catalytic pocket but need not make high affinity contacts itself.