Protein kinase C substrate phosphorylation and autophosphorylation are differentially modulated by the phosphatidylserine concentration in model membranes. Both substrate phosphorylation and auto-phosphorylation display a cooperative dependence on phosphatidylserine in sonicated vesicles composed of diacylglycerol and either phosphatidylcholine or a mixture of cell lipids (cholesterol, sphingomyelin, phosphatidylethanolamine, and phosphatidylcholine). However, the concentration of phosphatidylserine required to support phosphorylation varies with individual substrates. In general, autophosphorylation is favored at intermediate phosphatidylserine concentrations, while substrate phosphorylation dominates at high phosphatidylserine concentrations. These different phosphatidylserine dependencies may reflect different affinities of particular substrates for negatively charged membranes. Increasing the negative surface charge of sonicated vesicles increases the rate of substrate phosphorylation. In contrast to the modulation exerted by phosphatidylserine, diacylglycerol activates protein kinase C equally toward substrate phosphorylation and autophosphorylation. These results indicate that both diacylglycerol and phosphatidylserine regulate protein kinase C activity in the membrane: diacylglycerol turns the enzyme on, while phosphatidylserine affects the specificity toward different substrates.