In resting human epithelial and fibroblastic cells, c-Jun is phosphorylated on serine and threonine at five sites, three of which are phosphorylated in vitro by glycogen synthase kinase 3 (GSK-3). These three sites are nested within a single tryptic peptide located just upstream of the basic region of the c-Jun DNA-binding domain (residues 227-252). Activation of protein kinase C results in rapid, site-specific dephosphorylation of c-Jun at one or more of these three sites and is coincident with increased AP-1-binding activity. Phosphorylation of recombinant human c-Jun proteins in vitro by GSK-3 decreases their DNA-binding activity. Mutation of serine 243 to phenylalanine blocks phosphorylation of all three sites in vivo and increases the inherent trans-activation ability of c-Jun at least 10-fold. We propose that c-Jun is present in resting cells in a latent, phosphorylated form that can be activated by site-specific dephosphorylation in response to protein kinase C activation.