A cDNA encoding the complete amino acid sequence of rat protein phosphatase inhibitor-1 was obtained by screening a skeletal muscle library. The coding region represents a 171-residue polypeptide which demonstrated 80% overall identity with the primary sequence of rabbit inhibitor-1. Sequence homology between the rat and rabbit proteins was particularly striking (98% identity) in the NH2-terminal 61 amino acids, which encompass the threonine phosphorylated by cyclic AMP-dependent protein kinase. This domain possesses full inhibitor activity against type-1 protein phosphatases. In contrast, a domain of similar size at the COOH terminus showed only 57% conservation of primary structure between the two proteins. This reflects a remarkable difference in evolutionary pressures experienced by these domains and may emphasize a lesser role for the COOH-terminal region in inhibitor-1 function. Northern hybridization analysis of RNA from rat and rabbit tissues indicated the presence of two mRNAs, a major 0.7-kilobase and a minor 1.8-kilobase mRNA. The highest expression of inhibitor-1 mRNA was noted in skeletal muscle from both species. Analysis of mRNA levels illustrates potential post-transcriptional mechanisms controlling inhibitor-1 expression in some mammalian tissues.