The activity of rat liver 3-hydroxy-3-methylglutaryl-coenzyme A reductase [HMG-CoA reductase; mevalonate:NADP(+) oxidoreductase (CoA-acylating), EC 1.1.1.34] can be modulated in vitro by a phosphorylation-dephosphorylation reaction sequence. A microsomal reductase kinase catalyzes the phosphorylation of HMG-CoA reductase and histones. Histone phosphorylation was enhanced 2- to 3-fold by cyclic AMP. Reductase kinase exists in interconvertible active and inactive forms. Incubation of reductase kinase with phosphoprotein phosphatase resulted in a time-dependent decrease in the ability of reductase kinase to catalyze the phosphorylation of histones and to inactivate HMG-CoA reductase. Incubation of phosphoprotein phosphatase-inactivated reductase kinase with [gamma-(32)P]ATP plus Mg(2+) and a partially purified protein kinase designated reductase kinase kinase resulted in parallel increases in protein-bound (32)P radioactivity and ability to inactivate HMG-CoA reductase. Incubation of (32)P-labeled reductase kinase with phosphoprotein phosphatase resulted in a time-dependent loss of protein-bound (32)P radioactivity and a decrease in the ability to inactivate HMG-CoA reductase. Polyacrylamide gel electrophoresis of purified reductase kinase incubated with reductase kinase kinase and [gamma-(32)P]ATP plus Mg(2+) revealed that the (32)P radioactivity and reductase kinase enzymic activity were located in a single electrophoretic position. Dephosphorylation of (32)P-labeled purified reductase kinase with phosphoprotein phosphatase was associated with significant loss of radioactivity and enzymic activity in the protein band ascribed to reductase kinase. These results provide evidence that the activity of reductase kinase, like HMG-CoA reductase, is modulated by a reversible phosphorylation-dephosphorylation reaction sequence.