The modulator protein slowly converts the glycogen-bound protein phosphatase from liver, as well as its catalytic subunit, into an inactive form that requires protein kinase FA and MgATP for reactivation. The inactivation process could be completely prevented by addition of either 0.3 mM-NaF or 0.3 mM-phenylmethanesulphonyl fluoride (PMSF). The effectiveness of the proteinase inhibitor was not due to production of free fluoride. With the catalytic subunit a half-maximal effect of either fluorine compound was obtained at 25-50 microM. 2. The inactivation process was instantaneously blocked by the addition of NaF or PMSF at any moment during the incubation of the catalytic subunit with modulator. This fluoride effect was reversible. It did not result from a decreased affinity of modulator for the catalytic subunit. The use of analogues of PMSF showed that the fluorine atom was essential, but structural aspects were also an important determinant. 3. The relative efficiency of fluorine compounds in preventing the inactivation of the catalytic subunit by modulator corresponded to their relative potency as inhibitors of the phosphorylase phosphatase activity, but the latter effect required at least 20-fold higher effector concentrations. Incubation of the catalytic subunit with 10 mM-PMSF or -NaF caused an irreversible inhibition of the enzyme. 4. It is possible to prepare stable complexes of catalytic subunit and modulator, either active or ATPMg-dependent. Both species displayed the same molecular size during gel filtration. The inactive complex could be reactivated by incubation with MgATP and protein kinase FA. NaF and PMSF increased the final extent of re-activation at limiting concentrations of the protein kinase.