The adaptor protein complex-1 (AP-1) sorts and packages membrane proteins into clathrin-coated vesicles (CCVs) at the TGN and endosomes. Here we show that this process is highly regulated by phosphorylation of AP-1 subunits. Cell fractionation studies revealed that membrane-associated AP-1 differs from cytosolic AP-1 in the phosphorylation status of its β1 and μ1 subunits. AP-1 recruitment onto the membrane is associated with protein phosphatase 2A (PP2A)–mediated dephosphorylation of its β1 subunit, which enables clathrin assembly. This Golgi-associated isoform of PP2A exhibits specificity for phosphorylated β1 compared with phosphorylated μ1. Once on the membrane, the μ1 subunit undergoes phosphorylation, which results in a conformation change, as revealed by increased sensitivity to trypsin. This conformational change is associated with increased binding to sorting signals on the cytoplasmic tails of cargo molecules. Dephosphorylation of μ1 (and μ2) by another PP2A-like phosphatase reversed the effect and resulted in adaptor release from CCVs. Immunodepletion and okadaic acid inhibition studies demonstrate that PP2A is the cytosolic cofactor for Hsc-70–mediated adaptor uncoating. A model is proposed where cyclical phosphorylation/dephosphorylation of the subunits of AP-1 regulate its function from membrane recruitment until its release into cytosol.