The inhibitory subunit (PDE gamma) of the cGMP phosphodiesterase (PDE alpha beta gamma 2) in rod outer segments (ROS) realizes its regulatory role in phototransduction by inhibition of PDE alpha beta catalytic activity. The photoreceptor G-protein, transducin, serves as a transducer from the receptor (rhodopsin) to the effector (PDE) and eliminates the inhibitory effect of PDE gamma by direct interaction with PDE gamma. Our previous study [Udovichenko, Cunnick, Gonzalez and Takemoto (1994) J: Biol. Chem. 269, 9850-9856] has shown that PDE gamma is a substrate for protein kinase C (PKC) from ROS and that phosphorylation by PKC increases the ability of PDE gamma to inhibit PDE alpha beta catalytic activity. Here we report that transducin is less effective in activation of PDE alpha beta (gamma p)2 (a complex of PDE alpha beta with phosphorylated PDE gamma, PDE gamma p) than PDE alpha beta gamma 2. PDE gamma p also increases the rate constant of GTP hydrolysis of transducin (from 0.16 S-1 for non-phosphorylated PDE gamma to 0.21 s-1 for PDE gamma p). These data suggest that phosphorylation of the inhibitory subunit of PDE by PKC may regulate the visual transduction cascade by decreasing the photoresponse.