GABAA receptors possess consensus sequences for phosphorylation by PKC that are located on the presumed intracellular domains of beta and gamma 2 subunits. PKC phosphorylation sites were analyzed using purified receptor subunits and were located on up to 3 serine residues in beta 1 and gamma 2 subunits. The role of phosphorylation in receptor function was studied using recombinant receptors expressed in kidney cells and Xenopus oocytes and was compared with native neuronal GABAA receptors. For recombinant and native GABAA receptors, PKC phosphorylation caused a reduction in the amplitudes of GABA-activated currents without affecting the time constants for current decay. Selective site-directed mutagenesis of the serine residues reduced the effects of phorbol esters and revealed that serine 343 in the gamma 2 subunit exerted the largest effect on the GABA-activated response. These results indicate that PKC phosphorylation can differentially modulate GABAA receptor function.