DNA clones encoding the glycogen-binding (RG1) subunit of glycogen-associated protein phosphatase were isolated from rabbit skeletal muscle lambda gt11 cDNA libraries. Overlapping clones provided an open reading frame of 3327 nucleotides that predicts a polypeptide of 1109 amino acids with a molecular weight of 124,257. Northern hybridization of rabbit RNA identified a major mRNA transcript of 7.5 kilobases present in skeletal, diaphragm, and cardiac muscle, but not in brain, kidney, liver, and lung. Southern analysis of rabbit genomic DNA digested with various restriction endonucleases gave rise to a single hybridizing fragment, suggesting that a single gene is present. Expression of the complete RG1 subunit coding sequence in Escherichia coli generated a protein of apparent molecular weight on sodium dodecyl sulfate-polyacrylamide gel electrophoresis of approximately 160,000, similar to the size of the polypeptide detected by Western immunoblot in rabbit skeletal muscle extracts. The RG1 subunit shares significant homology with the Saccharomyces cerevisiae GAC1 gene product which is involved in activation of glycogen synthase and glycogen accumulation. The homology with GAC1 substantiates the role of this enzyme in control of glycogen metabolism. Hydropathy analysis of the RG1 subunit amino acid sequence revealed the presence of a hydrophobic region in the COOH terminus, suggesting a potential association with membrane. This result suggests that the same phosphatase regulatory component may be involved in targeting the enzyme both to membranes and to glycogen.