Protein kinase C (PKC) is a family of closely related phospholipid-dependent protein kinases. A fully active, phospholipid-independent catalytic fragment of PKC is produced by limited proteolysis of the enzyme. The catalytic fragment allows a simplified assay system for the analysis of PKC inhibitors that interact with the catalytic domain. Recently, we reported that N-myristoylation of the synthetic peptide substrate Arg-Lys-Arg-Thr-Leu-Arg-Arg-Leu (RKRTLRRL) transformed a peptide that completely lacked inhibitory activity against the histone kinase reactions of PKC and its catalytic fragment into a peptide that potently inhibited both of these reactions. N-Myristoylation did not alter the potency of the peptide as a PKC substrate, and the basis for the acquisition of inhibitory activity against the catalytic fragment by N-myristoylation of the peptide remained unclear. In this report, we propose a mechanism for catalytic fragment inhibition by the N-myristoylated peptide that is based on a comparison of the inhibitory potencies of several nonphosphorylatable analogs of N-myristoyl-RKRTLRRL, a kinetic analysis of the inhibition of the histone kinase activity of the catalytic fragment by nonphosphorylatable N-myristoyl-RKRTLRRL analogs, and an analysis of the inhibitory effects of the N-myristoylated peptide series on the intrinsic ATPase activity of PKC. Our results support a mechanism in which the N-myristoylated peptides inhibit the catalytic fragment by binding to PKCfree, but not to the complex PKC-ATP, at the protein-substrate binding site.(ABSTRACT TRUNCATED AT 250 WORDS)