Protein phosphatase-1 (PP1) plays an important role in a variety of cellular processes, including muscle contraction, cell-cycle progression, and neurotransmission. The localization and substrate specificity of PP1 are determined by a class of proteins known as targeting subunits. In the present study, the interaction between PP1 and spinophilin, a neuronal protein that targets PP1 to dendritic spines, has been characterized. Deletion analysis revealed that a high-affinity binding domain is located within residues 417-494 of spinophilin. This domain contains a pentapeptide motif (R/K-R/K-V/I-X-F) between amino acids 447 and 451 (R-K-I-H-F) that is conserved in other PP1 regulatory subunits. Mutation of phenylalanine-451 (F451A) or deletion of the conserved motif abolished the ability of spinophilin to bind PP1, as observed by coprecipitation, overlay, and competition binding assays. In addition, deletion of regions 417-442 or 474-494, either singly or in combination, impaired the ability of spinophilin to coprecipitate PP1. A comparison of the binding and inhibitory properties of spinophilin peptides suggested that distinct subdomains of spinophilin are responsible for binding and modulating PP1 activity. Mutational analysis of the modulatory subdomain revealed that spinophilin interacts with PP1 via a mechanism unlike those used by the cytosolic inhibitors DARPP-32 (dopamine- and cAMP-regulated phosphoprotein, Mr 32 000) and inhibitor-1. Finally, characterization of the interactions between spinophilin and PP1 has facilitated the design of peptide antagonists capable of disrupting spinophilin-PP1 interactions. These studies support the notion that spinophilin functions in vivo as a neuronal PP1 targeting subunit by directing the enzyme to postsynaptic densities and regulating its activity toward physiological substrates.