PKN is a fatty acid- and Rho GTPase-activated protein kinase whose catalytic domain in the carboxyl terminus is homologous to those of protein kinase C (PKC) family members. The amino terminal region of PKN is suggested to function as a regulatory domain, since tryptic cleavage or the binding of Rho GTPase to this region results in protein kinase activation of PKN. The structural basis for the regulation of PKN was investigated by analyzing the activity of a series of deletion/site-directed mutants expressed in insect cells. The amino-terminally truncated form of PKN (residue 455-942) showed low basal activity similar to that of the wild-type enzyme, and was arachidonic acid-dependent. However, further deletion (residue 511-942) resulted in a marked increase in the basal activity and a decrease in the arachidonic acid dependency. A (His)₆-tagged protein comprising residues 455-511 of PKN (designated His-Iα) inhibited the kinase activity of the catalytic fragment of PKN in a concentration-dependent manner in competition with substrate (K_i=0.6±0.2 μM). His-Iα also inhibited the activity of the catalytic fragment of PRK2, an isoform of PKN, but had no inhibitory effect on protein kinase A or protein kinase Cδ. The IC₅₀ value obtained in the presence of 40 μM arachidonic acid was two orders of magnitude greater than that in the absence of the modifier. These results indicate that this protein fragment functions as a specific inhibitor of PKN and PRK2, and that arachidonic acid relieves the catalytic activity of wild-type PKN from autoinhibition by residues 455-511 of PKN. Autophosphorylation of wild-type PKN increased the protein kinase activity, however, substitution of Thr64, Ser374, or Thr531 in the regulatory region of PKN with alanine, abolished this effect. Substitution of Thr774 in the activation loop of the catalytic domain of PKN with alanine completely abolished the protein kinase activity. These results suggest that these phosphorylation sites are also important in the regulation of the PKN kinase activity. Potential differences in the mechanism of activation between the catalytic regions of PKN and PRK2 are also discussed.