The prohormone convertases play important roles in the maturation of neuropeptides and peptide hormone precursors. Prohormone convertase-2 (PC2) is the only convertase that requires the expression of another neuroendocrine protein, 7B2, for expression of enzyme activity. In this study, we determined that 7B2 can be phosphorylated in Rin cells (a rat insulinoma cell line) and cultured chromaffin cells, but not in AtT-20 cells (derived from mouse anterior pituitary). Phosphoamino acid analysis of Rin cell 7B2 indicated the presence of phosphorylated serine and threonine. Phosphorylation of Ser115 (located within the minimally active 36-residue peptide) was confirmed by mutagenesis, although Ser115 did not represent the sole residue phosphorylated. Two independent assays were used to investigate the effect of phosphorylated 7B2 on PC2 activation: the ability of 7B2 to bind to pro-PC2 was assessed by co-immunoprecipitation, and activation of pro-PC2 was assessed in a cell-free assay. Phosphorylated 7B2 was unable to bind pro-PC2, and the phosphorylated 7B2 peptide (residues 86-121, known to be the minimally active peptide for pro-PC2 activation) was impaired in its ability to facilitate the generation of PC2 activity in membrane fractions containing pro-PC2. In vitro phosphorylation experiments using Golgi membrane fractions showed that 7B2 could be phosphorylated by endogenous Golgi kinases. Golgi kinase activity was strongly inhibited by the broad-range kinase inhibitor staurosporine and partially inhibited by the protein kinase C inhibitor bisindolylmaleimide I, but not by the other protein kinase A, Ca2+/calmodulin-dependent kinase II, myosin light chain kinase, and protein kinase G inhibitors tested. We conclude that phosphorylation of 7B2 functionally inactivates this protein and suggest that this may be analogous to the phosphorylating inactivation of BiP, which impairs its ability to bind substrate.