The NADPH oxidase of phagocytes generates microbicidal oxidants in response to a variety of stimuli. Its activation and assembly involve multiple SH3 domain interactions among several oxidase components. Here we present evidence that the cytosolic oxidase-associated protein, p40(phox), mediates down-regulation of NADPH oxidase through interactions with its SH3 domain. Recombinant p40(phox) was produced in several eukaryotic expression systems (insect, mammalian, and yeast) to explore its role in oxidase function in relation to domains involved in interactions with other factors, p47(phox) and p67(phox). p40(phox) inhibited oxidase activity in vitro when added to neutrophil membranes and recombinant p47(phox), p67(phox), and p21rac. Co-transfection of p40(phox) into K562 cells resulted in significant decreases ( approximately 40%) in whole cell oxidase activity. Furthermore, the isolated SH3 domain of p40(phox) was even more effective in inhibiting whole cell oxidase activity, consistent with experiments showing that this domain binds to the same proline-rich target in p47(phox) (residues 358-390) that interacts with p67(phox). In contrast, deletion of the carboxyl-terminal domain of p40(phox) that binds to p67(phox) did not relieve its oxidase inhibitory effects. Thus, p40(phox) appears to down-regulate oxidase function by competing with an SH3 domain interaction between other essential oxidase components.