CDC2 kinase activity was decreased by up to 75% when mitotic cell free extracts from mouse fibroblasts were incubated with cAMP and ATP. This effect was blocked by PKI, the heat stable inhibitor of cAMP-dependent protein kinase (PKA). An acidic, heat stable protein from G1 cells, consistent with inhibitor-1 of protein phosphatase 1, mimicked the effect of cAMP, but was not antagonized by PKI. Okadaic acid, another inhibitor of protein phosphatase 1, also downregulated CD2 activity, and the effect was independent of both cAMP and PKI. The evidence suggests that PKA exerts its effect by activating inhibitor-1 by phosphorylation, and that the next step in the regulatory pathway requires the inactivation of one or more protein phosphatase 1 isoenzymes. Non-denaturing gel electrophoresis suggested that the size and/or charge density of the CDC2 kinase complex was changed when the activity was downregulated by cAMP or G1 extracts.