A 20-residue peptide analogue (IASGRTGRRNAIHDILVSSA) of the 8000-dalton heat-stable cAMP-dependent protein kinase inhibitor undergoes efficient calcium-dependent binding by calmodulin, with Kd approximately 70 nM when calcium is present. It is a potent inhibitor of smooth muscle myosin light chain kinase and of the calmodulin-dependent phosphatase activity of calcineurin. At concentrations above 3 microM, the peptide stimulates the basal activity of calcineurin. The native protein kinase inhibitor has no effect on the catalytic activity of myosin light chain kinase and is moderately inhibitory to both the calmodulin-dependent and -independent phosphatase activity of calcineurin. Competition experiments using excess concentrations of calcineurin and calmodulin suggest that the primary interaction of the native heat-stable inhibitor is with the catalytic subunit of protein kinase. Dansylcalmodulin exhibits only a weak interaction with the inhibitor. Observations on deletion peptides of the 20-residue analogue help to delineate the overlapping peptide binding specificities of the cAMP-dependent protein kinase [Scott, J. D., Glaccum, M. B., Fischer, E. H., & Krebs, E. G. (1986) Proc. Natl. Acad. Sci. U.S.A. 83, 1613-1616] and calmodulin. In both cases, the most effectively bound peptides contain the RTGRR sequence.