The hematoxylin-stainable protein (HSP) in keratohyalin granules of the newborn rat epidermis was found to have the same amino acid composition and the same inhibitory and immunological properties as cystatin alpha. However, only its pI value (4.7) differed from that of cystatin alpha (5.3). Alkaline phosphatase treatment of HSP changed its pI value from 4.7 to 5.3. This pI change was inhibited by EDTA, an inhibitor of alkaline phosphatase. Furthermore, 32P from [gamma-32P]ATP was incorporated into recombinant cystatin alpha by a protein kinase C (PKC) preparation in the presence of phosphatidyl serine and Ca2+ ions as co-factors. The incorporation increased dose-dependently with the added cystatin alpha and was inhibited significantly by H-7, a specific inhibitor of PKC. SDS-PAGE autoradiography of the 32P-labeled proteins showed that 32P was incorporated into the cystatin alpha. This incorporation was not observed by the action of cAMP-dependent protein kinase. Therefore, it is highly possible that the HSP is a phosphorylated cystatin alpha and that the phosphorylation is catalyzed specifically by PKC.