Overexpression of phospholemman (PLM) in normal adult rat cardiac myocytes altered contractile function and cytosolic Ca2+ concentration ([Ca2+]i) homeostasis and inhibited Na+/Ca2+ exchanger (NCX1). In addition, PLM coimmunoprecipitated and colocalized with NCX1 in cardiac myocyte lysates. In this study, we evaluated whether the cytoplasmic domain of PLM is crucial in mediating its effects on contractility, [Ca2+]i transients, and NCX1 activity. Canine PLM or its derived mutants were overexpressed in adult rat myocytes by adenovirus-mediated gene transfer. Confocal immunofluorescence images using canine-specific PLM antibodies demonstrated that the exogenous PLM or its mutants were correctly targeted to sarcolemma, t-tubules, and intercalated discs, with little to none detected in intracellular compartments. Overexpression of canine PLM or its mutants did not affect expression of NCX1, sarco(endo)plasmic reticulum Ca(2+)-ATPase, Na(+)-K(+)-ATPase, and calsequestrin in adult rat myocytes. A COOH-terminal deletion mutant in which all four potential phosphorylation sites (Ser62, Ser63, Ser68, and Thr69) were deleted, a partial COOH-terminal deletion mutant in which Ser68 and Thr69 were deleted, and a mutant in which all four potential phosphorylation sites were changed to alanine all lost wild-type PLM's ability to modulate cardiac myocyte contractility. These observations suggest the importance of Ser68 or Thr69 in mediating PLM's effect on cardiac contractility. Focusing on Ser68, the Ser68 to Glu mutant was fully effective, the Ser63 to Ala (leaving Ser68 intact) mutant was partially effective, and the Ser68 to Ala mutant was completely ineffective in modulating cardiac contractility, [Ca2+]i transients, and NCX1 currents. Both the Ser63 to Ala and Ser68 to Ala mutants, as well as PLM, were able to coimmunoprecipitate NCX1. It is known that Ser68 in PLM is phosphorylated by both protein kinases A and C. We conclude that regulation of cardiac contractility, [Ca2+]i transients, and NCX1 activity by PLM is critically dependent on Ser68. We suggest that PLM phosphorylation at Ser68 may be involved in cAMP- and/or protein kinase C-dependent regulation of cardiac contractility.