Myelin basic protein (MBP) reduces the amount of phosphatase activity produced in the kinase FA-mediated activation of the ATP,Mg-dependent phosphatase. MBP was shown not only to inhibit the activated enzyme, but also to impair the kinase FA-mediated activation of the inactive phosphatase. In addition MBP prevents the time-dependent inactivation of the catalytic subunit by the modulator protein. These observations point to a regulatory role for MBP in the reversible activation of the ATP, Mg-dependent protein phosphatase by kinase FA.