cAMP-dependent transcription of steroid hydroxylase genes involves activation of cAMP-dependent protein kinase (PKA) and subsequent phosphorylation of downstream target proteins. Although the requirement for the activation of PKA is well established, none of the transcription factors required for steroid hydroxylase gene transcription have been found to be PKA phosphoproteins. In this study we examined the role of changes in phosphorylation state on the expression and transcriptional activity of the human CYP17 gene (hCYP17). Using inhibitors of serine/threonine phosphatase activity (okadaic acid) and phosphotyrosine phosphatase activity (peroxyvanadate), we can inhibit the cAMP-inducible binding of the steroidogenic factor-1 (SF-1), p54(nrb)/NonO, and polypyrimidine tract-binding protein-associated splicing factor (PSF) complex required for regulation of transcription to the promoter of hCYP17. Further, both okadaic acid and peroxyvanadate attenuate cAMP-stimulated increases in endogenous hCYP17 mRNA expression and in hCYP17 promoter-reporter construct luciferase activity. In vivo phosphorylation and immunoprecipitation of SF-1 show a cAMP-stimulated decrease in (32)P-labeled SF-1. Our findings demonstrate that activation of protein phosphatase(s) is essential for cAMP-dependent transcription of hCYP17 in H295R cells and suggest a role for PKA in phosphatase activation, which leads to dephosphorylation of SF-1 and increased gene transcription.