The inhibitor protein of the cAMP-dependent protein kinase is a potential high affinity regulator of cAMP function. We now show that it is phosphorylated in Tyr7 by the intrinsic tyrosine kinase activity of epidermal growth factor receptor. The phosphorylated form can be readily separated from the unphosphorylated protein by high pressure liquid chromatography which has permitted the isolation of stoichiometrically phosphorylated protein. Using this method, it has been demonstrated that this phosphorylation, which occurs within the inhibitor protein's active domain, results in a 6 to 9-fold decrease in inhibitory potency. Possibly, a component of growth control could be the coupling of tyrosine kinase activity to cAMP-mediated cellular proliferation via the regulation of the efficacy of the inhibitor protein.