Protein kinase C(alpha) (PKC(alpha)) is a key enzyme regulating the physiology of cells and their growth, differentiation, and apoptosis. PKC activity is known to be modulated by all-trans retinoic acid (atRA), although neither the action mechanism nor even the possible binding to PKCs has been established. Crystals of the C2-domain of PKC(alpha), a regulatory module in the protein that binds Ca(2+) and acidic phospholipids, have now been obtained by cocrystallization with atRA. The crystal structure, refined at 2.0 A resolution, shows that RA binds to the C2-domain in two locations coincident with the two binding sites previously reported for acidic phospholipids. The first binding site corresponds to the Ca(2+)-binding pocket, where Ca(2+) ions mediate the interactions of atRA with the protein, as they do with acidic phospholipids. The second binding site corresponds to the conserved lysine-rich cluster localized in beta-strands three and four. These observations are strongly supported by [(3)H]-atRA-binding experiments combined with site-directed mutagenesis. Wild-type C2-domain binds 2 mol of atRA per mol of protein, while the rate reduces to one in the case of C2-domain variants, in which mutations affect either Ca(2+) coordination or the integrity of the lysine-rich cluster site. Competition between atRA and acidic phospholipids to bind to PKC is a possible mechanism for modulating PKC(alpha) activity.