The effects of phospholipid acyl chain length (n(c)) and cholesterol on Na,K-ATPase reconstituted into liposomes of defined lipid composition are described. The optimal hydrophobic thickness of the lipid bilayer decreases from n(c) = 22 to 18 in the presence of 40 mol% cholesterol. Hydrophobic matching as well as specific interactions of cholesterol with the phosphorylation/dephosphorylation reactions is found to be important. A novel regulatory protein has been identified in Na,K-ATPase membrane preparations from the shark (phospholemmanlike protein from shark, PLMS) with significant homology to phospholemman (PLM), the major protein kinase substrate in myocardium. Both are members of the FXYD gene family. Another member of this family is the Na,K-ATPase gamma subunit indicating that these proteins may be specific regulators of the Na,K-ATPase. A regulatory mechanism is described in which association/dissociation of PLMS with the Na,K-ATPase is governed by its phosphorylation by protein kinases.