Glycogen synthase kinase 3 (GSK3) is a serine/threonine kinase that has been implicated in pathological conditions such as diabetes and Alzheimer's disease. We report the characterization of a GSK3 inhibitor, AR-A014418, which inhibits GSK3 (IC50 = 104 +/- 27 nM), in an ATP-competitive manner (Ki = 38 nM). AR-A014418 does not significantly inhibit cdk2 or cdk5 (IC50 > 100 microM) or 26 other kinases demonstrating high specificity for GSK3. We report the co-crystallization of AR-A014418 with the GSK3beta protein and provide a description of the interactions within the ATP pocket, as well as an understanding of the structural basis for the selectivity of AR-A014418. AR-A014418 inhibits tau phosphorylation at a GSK3-specific site (Ser-396) in cells stably expressing human four-repeat tau protein. AR-A014418 protects N2A neuroblastoma cells against cell death mediated by inhibition of the phosphatidylinositol 3-kinase/protein kinase B survival pathway. Furthermore, AR-A014418 inhibits neurodegeneration mediated by beta-amyloid peptide in hippocampal slices. AR-A014418 may thus have important applications as a tool to elucidate the role of GSK3 in cellular signaling and possibly in Alzheimer's disease. AR-A014418 is the first compound of a family of specific inhibitors of GSK3 that does not significantly inhibit closely related kinases such as cdk2 or cdk5.