The ATP.Mg-dependent protein phosphatase activating factor (FA) has been identified as a microtubule protein kinase and as a microtubule protein phosphatase activator. FA could phosphorylate microtubule-associated tau protein up to 4 moles of phosphates per mole of protein. However, more than 80% of the phosphates in 32P-tau phosphorylated by FA could be removed by ATP.Mg-dependent protein phosphatase and the tau phosphatase activity was FA-dependent. Functional study further revealed that as a tau kinase, FA could phosphorylate tau and thereby inhibits cross-linking copolymerization of tau with tubulin and actin filaments whereas as a tau phosphatase activating factor, FA could promote copolymerization of tau with tubulin and actin filaments. Taken together, the results provide evidence that a cyclic modulation of cytoskeleton assembly-disassembly can be controlled by FA, representing an efficient cyclic cascade mechanism for rapid structural and functional regulation of cytoskeletal system in the central nervous system.