Gz alpha is a G protein alpha subunit with biochemical properties that distinguish it from other members of the G protein alpha subunit family. One such property is its ability to be stoichiometrically phosphorylated by protein kinase C (PKC), both in vitro and in intact cells. The site of this phosphorylation has been mapped to a region near the N terminus of Gz alpha, but no functional significance of the modification has been established. To investigate this question, we have developed a baculovirus/Sf9 cell expression system to produce Gz alpha. The protein purified from Sf9 cells is functional as assessed by its ability both to bind guanine nucleotide in a Mg(2+)-sensitive fashion and to serve as a substrate for phosphorylation by PKC. Furthermore, addition of the G protein beta gamma complex purified from bovine brain inhibits phosphorylation of Gz alpha in a dose-dependent manner. Conversely, phosphorylation of Gz alpha inhibits its ability to interact with beta gamma subunits. These results establish a functional consequence for PKC-catalyzed phosphorylation of Gz alpha and suggest a mechanism for regulation of signaling through Gz by preventing reassociation of its subunits.