Protein kinase A holoenzyme is comprised of two catalytic (C) and two regulatory (R) subunits which keep the enzyme in an inhibited state before activation by cyclic-AMP. The C-subunit folds into a conserved bi-lobal core flanked by N- and C-terminal tails. We report here characterization of a C-tail loss-of-function mutant, CF327A, and a related suppressor mutant, CF327A/K285P. Phe-327 is the only residue outside the kinase core that binds to the adenine ring of ATP, whereas Lys-285 is approximately 45 A away and lies in an AGC kinase-specific insert. The two mutations were previously identified from a yeast genetic screen, where the F327A mutation was unable to complement cell growth but mutation of K285P in the same allele rescued cell viability. We show that CF327A exhibits significant reduction in catalytic efficiency, which likely explains the observed loss-of-function phenotype. Interestingly, the additional K285P mutation does not restore kinase activity but reduces the inhibitory interaction of the double mutant with RII subunits. The additional K285P mutation, thus, helps to keep a low but uninhibited PKA activity that is sufficient for cell viability. The crystal structure of CF327A/K285P further reveals that recruitment of Phe-327 to the ATP binding pocket not only contributes to the hydrophobic pocket, as previously thought, but also recruits its flanking C-tail region to the kinase core, thereby concertedly positioning the glycine-rich loop and ATP for phosphoryl transfer. The study exemplifies two different ways for regulating cAMP-dependent protein kinase activity through non-conserved residues and sheds light on the structural and functional diversity of the kinase family.