Peptidylglycine alpha-amidating monooxygenase (PAM) is a bifunctional enzyme that catalyzes the COOH-terminal alpha-amidation of neural and endocrine peptides through a two-step reaction carried out sequentially by its monooxygenase and lyase domains. PAM occurs in soluble and integral membrane forms. Metabolic labeling of stably transfected hEK-293 and AtT-20 cells showed that [32P]PO4(3-) was efficiently incorporated into Ser and Thr residues of membrane PAM but not into soluble PAM. Truncation of integral membrane PAM proteins (which terminate with Ser976) at Tyr936 eliminated their phosphorylation, suggesting that the COOH-terminal region of the protein was the site of phosphorylation. Recombinant PAM COOH-terminal domain was phosphorylated on Ser932 and Ser937 by protein kinase C (PKC). PAM-1 protein recovered from different subcellular fractions of stably transfected AtT-20 cells was differentially susceptible to calcium-dependent, staurosporine-inhibitable phosphorylation catalyzed by endogenous cytosolic protein kinase(s). Although phorbol ester treatment of hEK-293 cells expressing PAM-1 stimulated the cleavage/release of a bifunctional 105-kDa PAM protein, the effect was an indirect one since it was also observed in hEK-293 cells expressing a truncated PAM-1 protein that was not phosphorylated. AtT-20 cells expressing PAM-1 lacking one of the PKC sites (PAM-1/Ser937-->Ala) exhibited an altered pattern of PAM.PAM antibody internalization, with the mutant protein targeted to lysosomes upon internalization. Thus, phosphorylation of Ser937 in the COOH-terminal cytosolic domain of membrane PAM plays a role in a specific step in the targeting of this protein.