Protein kinases play critical roles in cellular activation and differentiation, and are involved in numerous pathophysiological processes. As a critical component of the regulatory circuitry of the cell, the kinase domain has the ability to integrate multiple signals, yielding a predetermined output. In PKC and other protein kinases of the AGC family, several phosphorylation sites control the activity, but these are in turn influenced by the presence of ligands in the binding pocket, which promotes phosphorylation. Here, we take PKC-theta as a prototypical member of the family and use molecular dynamics simulations to investigate the cross-talk that exists between regulatory and functional sites. We first show how the apo-unphosphorylated form of the kinase is populating a conformational space in which access to the ATP binding site and to the activation loop (AL) are simultaneously hindered. This could explain why the inactive state is not only catalytically incompetent but also resistant to activation. AL phosphorylation induces ATP binding site opening, which can then readily accept the cofactor. But the signal transmission mechanism works both ways, and if ligand binding to the unphosphorylated form occurs first, the AL is de-protected and becomes exposed to phosphorylation, thus providing an explanation for the paradoxical activation of PKCs by their inhibitors. Proteins 2012; © 2011 Wiley Periodicals, Inc.