Protein phosphatase-1 and protein phosphatase-2B (calcineurin) are eukaryotic serine/threonine phosphatases that share 40% sequence identity in their catalytic subunits. Despite the similarities in sequence, these phosphatases are widely divergent when it comes to inhibition by natural product toxins, such as microcystin-LR and okadaic acid. The most prominent region of non-conserved sequence between these phosphatases corresponds to the 12-13 loop of protein phosphatase-1, and the L7 loop of toxin-resistant calcineurin. In the present study, mutagenesis of residues 273-277 of the 12-13 loop of the protein phosphatase-1 catalytic subunit (PP1c) to the corresponding residues in calcineurin (312-316), resulted in a chimeric mutant that showed a decrease in sensitivity to microcystin-LR, okadaic acid, and the endogenous PP-1c inhibitor protein inhibitor-2. A crystal structure of the chimeric mutant in complex with okadaic acid was determined to 2.0-Å resolution. The 12-13 loop region of the mutant superimposes closely with that of wild-type PP-1c bound to okadaic acid. Systematic mutation of each residue in the 12-13 loop of PP-1c showed that a single amino acid change (C273L) was the most influential in mediating sensitivity of PP-1c to toxins. Taken together, these data indicate that it is an individual amino acid residue substitution and not a change in the overall 12-13 loop conformation of protein phosphatase-1 that contributes to disrupting important interactions with inhibitors such as microcystin-LR and okadaic acid.Protein phosphatase-1 (PP-1) 1 is a member of the phosphoprotein phosphatase gene family, whose members share 40% sequence identity in the catalytic subunit (PP-1c) and includes protein phosphatase-2A (PP-2A) and protein phosphatase-2B (PP-2B or calcineurin) (1). A striking structural similarity is seen upon superimposition of the crystal structures of PP-1c and the calcineurin catalytic subunit (calcineurin A), especially in the active site regions (the structure of PP-2A has not been determined). Despite the similarities in sequence and structure, PP-1c and calcineurin A have distinct inhibitor and substrate specificities. PP-1c is sensitive to the endogenous inhibitor proteins inhibitor-1 and inhibitor-2, as well as to the exogenous marine natural product inhibitors microcystin-LR (MCLR) and okadaic acid (OA). Calcineurin is markedly less sensitive to these inhibitors (250-fold for OA and over 1000-fold for the microcystins) (2-5).One region of sequence dissimilarity between PP-1c, PP2Ac, and calcineurin A is the 12-13 loop region of PP-1c/ PP-2Ac (residues 273 to 277 in PP-1c and 266 to 270 in PP-2Ac), which corresponds to the L7 loop of calcineurin A (residues 312-316). Residues of the 12-13 loop region have previously been implicated in inhibitor selectivity (6 -8). The importance of this region was first discovered when an okadaic acid-resistant isoform of PP-2A in Chinese hamster ovary cells was found to have a mutation in Cys 269 (9). The corresponding residues in PP-1c an...