In noradrenergic progenitors, Phox2a mediates cell cycle exit and neuronal differentiation by inducing p27(Kip1) transcription in response to activation of the cyclic AMP (cAMP) pathway. The mechanism of cAMP-mediated activation of Phox2a is unknown. We identified a cluster of phosphoserine-proline sites in Phox2a by mass spectrometry. Ser206 appeared to be the most prominent phosphorylation site. A phospho-Ser206 Phox2a antibody detected dephosphorylation of Phox2a that was dependent on activation of the cAMP pathway, which occurred prior to neuronal differentiation of noradrenergic CAD cells. Employing serine-to-alanine and serine-to-aspartic acid Phox2a substitution mutants expressed in inducible CAD cell lines, we demonstrated that the transcriptional activity of Phox2a is regulated by two sequential cAMP-dependent events: first, cAMP signaling promotes dephosphorylation of Phox2a in at least one site, Ser206, thereby allowing Phox2a to bind DNA and initiate p27(Kip1) transcription; second, following dephosphorylation of the phosphoserine cluster (Ser202 and Ser208), Phox2a becomes phosphorylated by protein kinase A (PKA) on Ser153, which prevents association of Phox2a with DNA and terminates p27(Kip1) transcription. This represents a novel mechanism by which the same stimulus, cAMP signaling, first activates Phox2a by dephosphorylation of Ser206 and then, after a built-in delay, inactivates Phox2a via PKA-dependent phosphorylation of Ser153, thereby modulating onset and duration of p27(Kip1) transcription.