Calphostin C (UCN-1028C), a newly isolated compound from Cladosporium cladosporioides, is a potent and specific inhibitor of protein kinase C, because it was 1000 times more inhibitory to protein kinase C (IC50, 0.05 microM) than other protein kinases such as cAMP-dependent protein kinase and tyrosine-specific protein kinase (IC50, greater than 50 microM). Calphostin C did not inhibit calcium activated neutral protease (calpain)-digested protein kinase C, indicating that it interacts with the regulatory domain of protein kinase C. In addition this compound showed inhibitory effects on the binding of [3H]PDBu to protein kinase C. The potent cytotoxic activity and antitumor activity of calphostin C might be due to the inhibition of protein kinase C, and thus it may be potentially useful for the therapeutic application.