DNA-dependent protein kinase (DNA-PK) is a complex of DNA-PK catalytic subunit (DNA-PKcs) and the DNA end-binding Ku70/Ku80 heterodimer. DNA-PK is required for DNA double strand break repair by the process of nonhomologous end joining. Nonhomologous end joining is a major mechanism for the repair of DNA double strand breaks in mammalian cells. As such, DNA-PK plays essential roles in the cellular response to ionizing radiation and in V(D)J recombination. In vitro, DNA-PK undergoes phosphorylation of all three protein subunits (DNA-PK catalytic subunit, Ku70 and Ku80) and phosphorylation correlates with inactivation of the serine/threonine protein kinase activity of DNA-PK. Here we show that phosphorylation-induced loss of the protein kinase activity of DNA-PK is restored by the addition of the purified catalytic subunit of either protein phosphatase 1 or protein phosphatase 2A (PP2A) and that this reactivation is blocked by the potent protein phosphatase inhibitor, microcystin. We also show that treating human lymphoblastoid cells with either okadaic acid or fostriecin, at PP2A-selective concentrations, causes a 50-60% decrease in DNA-PK protein kinase activity, although the protein phosphatase 1 activity in these cells was unaffected. In vivo phosphorylation of DNA-PKcs, Ku70, and Ku80 was observed when cells were labeled with [(32)P]inorganic phosphate in the presence of the protein phosphatase inhibitor, okadaic acid. Together, our data suggest that reversible protein phosphorylation is an important mechanism for the regulation of DNA-PK protein kinase activity and that the protein phosphatase responsible for reactivation in vivo is a PP2A-like enzyme.