Atypical PKC (PKC iota) is a key organizer of cellular asymmetry. Sequential extractions of intestinal cells showed a pool of enzymatically active PKC iota and the chaperone Hsp70.1 attached to the apical cytoskeleton. Pull-down experiments using purified and recombinant proteins showed a complex of Hsp70 and atypical PKC on filamentous keratins. Transgenic animals overexpressing keratin 8 displayed delocalization of Hsp70 and atypical PKC. Two different keratin-null mouse models, as well as keratin-8 knockdown cells in tissue culture, also showed redistribution of Hsp70 and a sharp decrease in the active form of atypical PKC, which was also reduced by Hsp70 knockdown. An in-vitro turn motif rephosphorylation assay indicated that PKC iota is dephosphorylated by prolonged activity. The Triton-soluble fraction could rephosphorylate PKC iota only when supplemented with the cytoskeletal pellet or filamentous highly purified keratins, a function abolished by immunodepletion of Hsp70 but rescued by recombinant Hsp70. We conclude that both filamentous keratins and Hsp70 are required for the rescue rephosphorylation of mature atypical PKC, regulating the subcellular distribution and steady-state levels of active PKC iota.