The leukocyte NADPH oxidase catalyzes the production of O(2)(-) from oxygen at the expense of NADPH. Activation of the enzyme requires interaction of the cytosolic factors p47(PHOX), p67(PHOX), and Rac2 with the membrane-associated cytochrome b(558). Activation of the oxidase in a semirecombinant cell-free system in the absence of an amphiphilic activator can be achieved by phosphorylation of the cytosolic factor p47(PHOX) by protein kinase C. Another cytosolic factor, p40(PHOX), was recently shown to be phosphorylated on serine and threonine residues upon activation of NADPH oxidase, but both stimulatory and inhibitory roles were reported. In the present study, we demonstrate that the addition of phosphorylated p40(PHOX) to the cell-free system inhibits NADPH oxidase activated by protein kinase C-phosphorylated p47(PHOX), an effect not observed with the unphosphorylated p40(PHOX). Moreover phosphorylated p40(PHOX) inhibits the oxidase if added before or after full activation of the enzyme. Direct mutagenesis of protein kinase C consensus sites enables us to conclude that phosphorylation of threonine 154 is required for the inhibitory effect of p40(PHOX) to occur. Although the phosphorylated mutants and nonphosphorylated mutants are still able to interact with both p47(PHOX) and p67(PHOX) in pull-down assays, their proteolysis pattern upon thrombin treatment suggests a difference in conformation between the phosphorylated and nonphosphorylated mutants. We postulate that phosphorylation of p40(PHOX) on threonine 154 leads to an inhibitory conformation that shifts the balance toward an inhibitory role and blocks oxidase activation.