Dynamic regulation of ion channels is critical for maintaining fluid balance in epithelial tissues. Cystic fibrosis, a genetic disease characterized by impaired fluid transport in epithelial tissues, is caused by dysfunctional cystic fibrosis transmembrane conductance regulator (CFTR) Cl^- channel activity. Recent studies have shown that binding of PSD-95/Dlg/ZO-1 (PDZ) domain proteins to CFTR is important for retaining it at the apical membrane and for regulating its channel activity. Here, we describe a phosphorylation mechanism that regulates CFTR channel activity, which is mediated by PDZ domains. The Na⁺/H⁺ exchanger regulatory factor (NHERF) binds to CFTR and increases its open probability (P_o). Protein kinase C disrupts the stimulatory effect of NHERF on CFTR channel P_o. Phosphorylation by PKC of Ser-162 in the PDZ2 domain of NHERF is critical for this functional effect. Furthermore, a mutation in PDZ2 that mimics phosphorylation decreases CFTR binding and disrupts the ability of NHERF PDZ1–2 to stimulate CFTR channel P_o. Our results identify a role for PKC and suggest that phosphorylation of NHERF PDZ2 domain may be an important mechanism for regulating CFTR channel activity.