KaiA, KaiB and KaiC constitute the circadian clock machinery in cyanobacteria. KaiC is a homohexamer; its subunit contains duplicated halves, each with a set of ATPase motifs. Here, using highly purified KaiC preparations of the thermophilic cyanobacterium Thermosynechococcus elongatus BP-1 produced in Escherichia coli, we found that the N- and C-terminal domains of KaiC had extremely weak ATPase activity. ATPase activity showed temperature compensation in wild-type KaiC, but not in KaiC(S431A/T432A), a mutant that lacks two phosphorylation sites. We concluded that KaiC phosphorylation is involved in the ATPase temperature-compensation mechanism-which is probably critical to the stability of the circadian clock in cyanobacteria-and we hypothesized the following temperature-compensation mechanism: (i) The C-terminal phosphorylation sites of a KaiC hexamer subunit are phosphorylated by the C-terminal domain of an adjacent KaiC subunit; (ii) the phosphorylation suppresses the ATPase activity of the C-terminal domain; and (iii) the phosphorylated KaiC spontaneously dephosphorylates, resulting in the recover of ATPase activity.