The activity of microsomal 3-hydroxy-3-methylglutaryl coenzyme A reductase (HMG-CoA reductase) [mevalonate:NADP+ oxidoreductase (CoA-acylating); EC 1.1.1.34] was inhibited by ATP+Mg2+. Inactivation of HMG-CoA reductase by ATP+Mg2+ was dependent on time, temperature, and ATP concentration. Incubation of microsomal HMG-CoA reductase with [gamma-32P]ATP+Mg2+ was associated with a reciprocal increase in [32P]protein-bound radioactivity and a decrease in enzymatic activity. Incubation of 32P-labeled microsomal HMG-CoA reductase with a partially purified cytosolic phosphatase resulted in a time-dependent reciprocal release of [32P]protein-bound radioactivity and reactivation of enzyme activity. Phosphorylation of HMG-CoA reductase was confirmed by immunoprecipitation of partially purified [gamma-32P]-ATP+Mg2+-inactivated microsomal HMG-CoA reductase with a reductase-specific antiserum. Sodium dodecyl sulfate electrophoresis of the [gamma-32P]immunoprecipitate revealed that the 32P radioactivity was located in the electrophoretic position of HMG-CoA reductase. These results established that the reversible inactivation of HMG-CoA reductase by ATP+Mg2+ was due to covalent modification of the enzyme by a phosphorylation-dephosphorylation reaction sequence. The existence of HMG-CoA reductase in interconvertible active and inactive forms provides a mechanism for the rapid short-term regulation of the pathway for cholesterol biosynthesis.