The phosphorylation activity of atypical Protein Kinase C (aPKC) is central to the establishment of cell polarity by Par complex. Like other PKC family members, aPKC contains a pseudosubstrate domain that binds to the active site in the kinase domain and acts as an internal inhibitor. Despite the presence of the cis‐acting inhibitor, another Par complex member, Par‐6, is thought to repress aPKC activity. To examine the precise mechanism by which the pseudosubstrate domain and Par‐6 regulate aPKC activity, we reconstitute the system in vitro and performed a detailed kinetic analysis. We confirm that the pseudosubstrate domain is responsible for the autoinhibition. Surprisingly, rather than acting as an inhibitor, Par‐6 activates aPKC by displacing the pseudosubstrate from the kinase domain. Par‐6 activation of aPKC is consistent with our observation that Par‐6/aPKC complex, but not aPKC alone, is competent to release its substrate from the cell membrane in Drosophila S2 cells. Our data support a model in which Par‐6 displacement of aPKC pseudosubstrate domain is required for the diverse cell polarities mediated by the Par complex. NIH Grant 068032