A 70-kDa protein is phosphorylated in cell-free preparations from rat or mouse fibroblasts by an endogenous protein kinase. This protein is immunologically related to a group of 68-kDa to 87-kDa proteins described in the literature as substrates for protein kinase C (PK-C). Although the phosphorylation of the 70-kDa protein by isolated plasma membranes takes place in the presence of EGTA, we conclude that the reaction is catalyzed by PK-C based on its inhibition by staurosporin. As shown previously, pure PK-C phosphorylates a synthetic random polymer of arginine and serine in the absence of Ca2+ and lipids, a reaction markedly stimulated by an endogenous unidentified activator of PK-C. When the 70-kDa protein from normal fibroblasts was exposed to the cytosol of chemically or ras-transformed fibroblasts, it disappeared as measured by phosphorylation by added PK-C. Cytosol of normal fibroblasts was much less effective (ca. 20%). Cathepsin L purified from rat kidney or from the medium of transformed cells had an effect similar to that of the cytosol of transformed cells. When the 70-kDa protein was phosphorylated by PK-C prior to exposure to cathepsin L or to the cytosol of transformed cells, there was a marked protection of the 70-kDa protein. We conclude that the 70-kDa protein is degraded by cathepsin L as ascertained by both immunological and biochemical assays and that it is protected by prior phosphorylation with PK-C. The possible role of this effect in signal transduction is discussed.