Caldesmon is a component of smooth muscle thin filaments that inhibits the actomyosin ATPase via its interaction with actin-tropomyosin. We have performed a comprehensive transient kinetic characterization of the actomyosin ATPase in the presence of smooth muscle caldesmon and tropomyosin. At physiological ratios of caldesmon to actin (1 caldesmon/7 actin monomers) actomyosin ATPase is inhibited by about 75%. Inhibitory caldesmon concentrations had little effect upon the rate of S1 binding to actin, actin-S1 dissociation by ATP, and dissociation of ADP from actin-S1 x ADP; however the rate of phosphate release from the actin-S1 x ADP x P(i) complex was decreased by more than 80%. In addition the transient of phosphate release displayed a lag of up to 200 ms. The presence of a lag phase indicates that a step on the pathway prior to phosphate release has become rate-limiting. Premixing the actin-tropomyosin filaments with myosin heads resulted in the disappearance of the lag phase. We conclude that caldesmon inhibition of the rate of phosphate release is caused by the thin filament being switched by caldesmon to an inactive state. The active and inactive states correspond to the open and closed states observed in skeletal muscle thin filaments with no evidence for the existence of a third, blocked state. Taken together these data suggest that at physiological concentrations, caldesmon controls the isomerization of the weak binding complex to the strong binding complex, and this causes the inhibition of the rate of phosphate release. This inhibition is sufficient to account for the inhibition of the steady state actomyosin ATPase by caldesmon and tropomyosin.