Human Werner Syndrome is characterized by early onset of aging, elevated chromosomal instability, and a high incidence of cancer. Werner protein (WRN) is a member of the recQ gene family, but unlike other members of the recQ family, it contains a unique 3'-->5' exonuclease activity. We have reported previously that human Ku heterodimer interacts physically with WRN and functionally stimulates WRN exonuclease activity. Because Ku and DNA-PKcs, the catalytic subunit of DNA-dependent protein kinase (DNA-PK), form a complex at DNA ends, we have now explored the possibility of functional modulation of WRN exonuclease activity by DNA-PK. We find that although DNA-PKcs alone does not affect the WRN exonuclease activity, the additional presence of Ku mediates a marked inhibition of it. The inhibition of WRN exonuclease by DNA-PKcs requires the kinase activity of DNA-PKcs. WRN is a target for DNA-PKcs phosphorylation, and this phosphorylation requires the presence of Ku. We also find that treatment of recombinant WRN with a Ser/Thr phosphatase enhances WRN exonuclease and helicase activities and that WRN catalytic activity can be inhibited by rephosphorylation of WRN with DNA-PK. Thus, the level of phosphorylation of WRN appears to regulate its catalytic activities. WRN forms a complex, both in vitro and in vivo, with DNA-PKC. WRN is phosphorylated in vivo after treatment of cells with DNA-damaging agents in a pathway that requires DNA-PKcs. Thus, WRN protein is a target for DNA-PK phosphorylation in vitro and in vivo, and this phosphorylation may be a way of regulating its different catalytic activities, possibly in the repair of DNA dsb.