Protein kinase D (PKD) is activated by phosphorylation in intact cells stimulated by phorbol esters, cell permeant diacylglycerols, bryostatin, neuropeptides, and growth factors, but the critical activating residues in PKD have not been identified. Here, we show that substitution of Ser744 and Ser748 with alanine (PKD-S744A/S748A) completely blocked PKD activation induced by phorbol-12,13-dibutyrate (PDB) treatment of intact cells as assessed by autophosphorylation and exogenous syntide-2 peptide substrate phosphorylation assays. Conversely, replacement of both serine residues with glutamic acid (PKD-S744E/S748E) markedly increased basal activity (7.5-fold increase compared with wild type PKD). PKD-S744E/S748E mutant was only slightly further stimulated by PDB treatment in vivo, suggesting that phosphorylation of these two sites induces maximal PKD activation. Two-dimensional tryptic phosphopeptide analysis obtained from PKD mutants immunoprecipitated from 32P-labeled transfected COS-7 cells showed that two major spots present in the PDB-stimulated wild type PKD or the kinase-dead PKD-D733A phosphopeptide maps completely disappeared in the kinase-deficient triple mutant PKD-D733A/S744E/S748E. Our results indicate that PKD is activated by phosphorylation of residues Ser744 and Ser748 and thus provide the first example of a non-RD kinase that is up-regulated by phosphorylation of serine/threonine residues within the activation loop.