In this paper it has been shown that increase in intracellular cAMP by epinephrine or its analogue dibutyryl cAMP (Bt 2cAMP) abolishes in a dose-dependent manner the protein kinase C (PKC)-mediated respiratory burst in polymorphonuclear leukocytes. The mechanism of inhibition has been shown to involve induction of cytosolic phosphoprotein phosphatase activity specific to cells receiving dual signals (PKC, PKA), as minimum respiratory burst was associated with cells with maximum phosphatase activity. Inclusion of specific PKA inhibitor completely restricted the development of dual signal-induced phosphatase activity in vitro, demonstrating the requirement of multisite phosphorylation of the phosphatase for the development of its activity. Purified phosphatase had a molecular weight of 78,000 and could exert its inhibitory effect on PKC-triggered respiratory burst in permeabilized cells, clearly showing that down-regulation of oxidase activity involved dephosphorylation by the phosphatase. Interaction of the purified phosphatase with eightfold purified NADPH oxidase as revealed by fluorescence studies further confirmed the role of the phosphatase in the respiratory burst event. Taken together, we have been able to establish that cross-talk between protein kinase C and protein kinase A is essential to ‘turn off’ generation of reactive oxygen species.