We expressed the small subunit of smooth muscle myosin light chain phosphatase (MPs) in Escherichia coli, and have studied its molecular properties as well as its interaction with the targeting subunit (MPt). MPs (M r ؍ 18,500) has an anomalously low electrophoretic mobility, running with an apparent M r of ϳ21,000 in sodium dodecyl sulfate-gel electrophoresis. CD spectroscopy shows that it is ϳ45% ␣-helix and undergoes a cooperative temperature-induced unfolding with a transition midpoint of 73°C. Limited proteolysis rapidly degrades MPs to a stable C-terminal fragment (M r ؍ 10,000) that retains most of the helical content. Rotary shadowing electron microscopy reveals that it is an elongated protein with two domains. Sedimentation velocity measurements show that recombinant MPt (M r ؍ 107,000), intact MPs, and the 10-kDa MPs fragment are all dimeric, and that MPs and MPt form a complex with a molar mass consistent with a 1:1 heterodimer. Sequence analysis predicts that regions in the C-terminal portions of both MPs and MPt have high probabilities for coiled coil formation. A synthetic peptide from a region of MPs encompassing residues 77-116 was found to be 100% ␣-helical, dimeric, and formed a complex with MPt with a molecular mass corresponding to a heterodimer. Based on these results, we propose that MPs is an elongated molecule with an N-terminal head and a C-terminal stalk domain. It dimerizes via a coiled coil interaction in the stalk domain, and interacts with MPt via heterodimeric coiled coil formation. Since other proteins with known regulatory function toward MP also have predicted coiled coil regions, our results suggest that these regulatory proteins target MP via the same coiled coil strand exchange mechanism with MPt.Contraction of smooth muscle is regulated by phosphorylation of myosin regulatory light chain. Proper functioning of all smooth muscles requires precise control of the extent of this phosphorylation (1, 2). This control is achieved by regulating the activities of myosin light chain kinase and the corresponding phosphatase. Whereas myosin light chain kinase and its regulation by calmodulin are well studied (3), much less was known about the phosphatase until a heterotrimeric myofibrilassociated myosin phosphatase (MP) 1 was purified from avian gizzard (4, 5) and pig bladder (6). This enzyme appears to be the major if not the only myosin phosphatase in smooth muscle (7). It is composed of three subunits with apparent molecular masses (based on SDS-PAGE mobilities) of 130, 38, and 20 kDa (designated here as MPt, MPc, and MPs respectively) (reviewed in Erdödi et al. (8), and Hartshorne et al. (9)). MPc, the catalytic subunit, was identified as the ␦-isoform of type 1 protein phosphatase (PP1C␦). The targeting subunit, MPt, has been shown to bind myosin and has been attributed the function of targeting MPc to myosin. The small subunit, MPs, is a putative regulatory subunit whose exact function is thus far unknown. Several regulatory systems have been proposed to regulate the activit...