The enzyme glycogen synthase kinase-3 (GSK-3) has been implicated in the control of several metabolic enzymes and transcription factors in response to extracellular signals. In the past, the enzyme has been considered to be a protein Ser/Thr kinase although it was recently reported to contain Tyr(P) (Hughes, K., Nikolakaki, E., Plyte, S. E., Totty, N. F., and Woodgett, J. R. (1993) EMBO J. 12, 803-808). A cDNA encoding rabbit skeletal muscle GSK-3 beta was cloned and expressed in Escherichia coli as an active protein kinase, with apparent M(r) 46,000, capable of phosphorylating several known GSK-3 substrates. Recombinant GSK-3 beta autophosphorylated on Ser, Thr, and Tyr residues although the enzyme already contained Tyr(P) as judged by its recognition by anti-Tyr(P) antibodies. The net result of the autophosphorylation was a 3-5-fold reduction in enzyme activity. GSK-3 alpha, purified from rabbit muscle, also underwent autophosphorylation but only on Ser and Thr residues. In this case, the autophosphorylation stabilized the enzyme activity compared with the control lacking ATP/Mg2+. Of several phosphatases tested, the lambda-phage phosphatase was the most effective in dephosphorylating at Ser and Thr residues but did not dephosphorylate at Tyr residues. The action of the lambda-phosphatase caused a reactivation of GSK-3 beta to approximately 80% of the starting activity. The protein tyrosine phosphatase PTP1B was able to dephosphorylate at Tyr residues leading to a reduction in enzyme activity. A truncated form of GSK-3 beta, apparent M(r) 40,000, had a significantly higher specific activity, was defective in autophosphorylation, and was not inactivated in the autophosphorylation reaction. We conclude that GSK-3 beta is a dual specificity protein kinase in the same sense as the mitogen-activated protein kinase/ERK family of enzymes. Phosphorylation at different residues differentially controls enzyme activity, Ser/Thr phosphorylation causing inactivation and Tyr phosphorylation resulting in increased activity.