Cu-ATPase ATP7B (Wilson's disease protein) transports copper into the trans-Golgi network for biosynthetic incorporation into ceruloplasmin and sequesters excess copper to endocytic vesicles for further export out of the cell. The activity and intracellular location of ATP7B are regulated by copper levels; the trafficking of ATP7B between cellular compartments is coupled to changes in the level of protein phosphorylation. Neither the nature of the kinase(s) phosphorylating ATP7B nor the location of phosphorylation sites is known. We demonstrate that the membrane-bound ATP7B is phosphorylated by an ATP-dependent, GTP-independent kinase that can be either soluble or membrane-associated. Mg(2+) or Mn(2+) is necessary for kinase activity. We further show that the recombinant N-terminal domain of ATP7B (N-ATP7B) is a specific target for a kinase-mediated phosphorylation in vitro and in cells. Although exogenous addition of copper is not required for kinase activity, copper binding to N-ATP7B markedly alters the exposure of loops connecting the metal-binding subdomains (MBDs) to proteolysis and facilitates phosphorylation by 25-30%. MBD1-2 and MBD4-5 linkers become protected, while MBD2-3 and MBD3-4 regions remain exposed. A significant, 5-fold increase in the level of phosphorylation is also observed for the ATP7B variant that lacks the 29 kDa N-terminal fragment (mostly likely comprised of MBD1-3). Analysis of phosphorylated peptides by two-dimensional gel electrophoresis and mass spectrometry points to the loop connecting MBD3 and MBD4 as a region of phosphorylation. Altogether, the results suggest a mechanism in which kinase-mediated phosphorylation of ATP7B is controlled by a conformational state of N-ATP7B.