p21-activated kinases (Pak)/Ste20 kinases are regulated in vitro and in vivo by the small GTP-binding proteins Rac and Cdc42 and lipids, such as sphingosine, which stimulate autophosphorylation and phosphorylation of exogenous substrates. The mechanism of Pak activation by these agents remains unclear. We investigated Pak kinase activation in more detail to gain insight into the interplay between the GTPase/sphingosine binding, an intramolecular inhibitory interaction, and autophosphorylation. We present biochemical evidence that an autoinhibitory domain (ID) contained within amino acid residues 67-150 of Pak1 interacts with the carboxyl-terminal kinase domain and that this interaction is regulated in a GTPase-dependent fashion. Cdc42-and sphingosine-stimulated Pak1 activity can be inhibited in trans by recombinant ID peptide, indicating similarities in their mode of activation. However, Pak1, which was autophosphorylated in response to either GTPase or sphingosine, is highly active and is insensitive to inhibition by the ID peptide. We identified phospho-acceptor site threonine 423 in the kinase activation loop as a critical determinant for the sensitivity to autoinhibition and enzymatic activity. Phosphorylation studies suggested that the stimulatory effect of both GTPase and sphingosine results in exposure of the activation loop, making it accessible for intermolecular phosphorylation.Localized regulation of protein kinase activity is an essential means to ensure spatial and temporal control of signaling events in a cellular environment. Hormonal or other stimuli are usually necessary to switch a kinase into a catalytically competent state, allowing phosphorylation of substrates to take place. An emerging regulatory theme is that inhibitory mechanisms exist to keep protein kinases in an inactive state (1, 2), and that relief of such inhibition allows activation to occur. Kinases often act autocatalytically to phosphorylate key amino acid residues that relieve autoinhibition and enhance catalytic efficiency. Alternatively, exogenous kinases may also serve this role. However, activation must be reversed in the absence of the stimulus, and dephosphorylation by protein phosphatases is thought to mediate switching the active kinase back to an inactive or basally activated state. p21-activated kinases (Paks) 1 belong to a growing family of serine/threonine kinases involved in the control of various cellular processes, including the cell cycle, dynamics of the cytoskeleton, apoptosis, and transcription (3). Pak kinase activity is regulated by members of the Rho family of GTPases, specifically Cdc42 and Rac. These GTPases bind to Pak kinase solely in their active forms, i.e. the GTP-bound state, resulting in stimulation of the kinase activity both in vitro and in vivo. The molecular details of how the GTPases exert their effect on the kinase to induce its activation remain unclear, however. Several lines of evidence suggested that the amino-terminal nonkinase region of Pak, in which the Cdc42/Rac-binding site is loca...