The β isoform of the type II regulatory subunit (RIIβ) of protein kinase A suppresses CREB transcriptional activity and c-Fos production in T cells following activation via the TCR. Because CREB is an integral nuclear transcription factor for IL-2 production by T cells, we tested the hypothesis that RIIβ down-regulates IL-2 expression and IL-2 production in T cells. Stable transfection of RIIβ in Jurkat T cells led to an∼ 90% reduction in IL-2 mRNA and IL-2 protein following T cell activation. The inhibition of IL-2 production was associated with phosphorylation of the RIIβ subunit at serine 114 (pRIIβ) and localization of pRIIβ in intranuclear clusters. A serine 114 phosphorylation-defective mutant, RIIβ S114A, did not form these intranuclear clusters as well as wild-type RIIβ, and did not inhibit IL-2 mRNA and protein synthesis, indicating that serine 114 phosphorylation is required for both nuclear localization and down-regulation of IL-2 production by RIIβ. In contrast to its effect on IL-2, RIIβ induced constitutive up-regulation of CD154 mRNA and cell surface expression. Thus, pRIIβ differentially regulates gene expression following T cell activation. Unexpectedly, we also found that stable overexpression of another protein kinase A regulatory subunit, RIα, had the opposite effect on IL-2 expression, causing a 3-to 4-fold increase in IL-2 production following stimulation. In summary, our data demonstrate a novel mechanism by which serine 114 phosphorylation and nuclear localization of RIIβ controls the regulation of gene expression in T cells.