Physical association between proteins involved in signal transduction is required for their functions. Therefore, identification of the interacting sites in the signaling molecules can lead to the development of means to modulate these interactions. We applied this approach to study signal transduction by protein kinase C (PKC). We have previously identified potential PKC binding sites in two PKC binding proteins (annexin I and RACK1). Peptides derived from these sequences inhibit PKC binding to RACK1 in vitro. Here, we tested the ability of two of these peptides, I (KGDYEKILVALCGGN) and rVI (DIINALCF), to affect PKC-mediated function in vivo. The peptides were microinjected into Xenopus oocytes, and insulin-induced beta PKC translocation and oocyte maturation were examined. The peptides had opposite activities on oocyte; peptide I inhibited whereas peptide rVI stimulated insulin-induced Xenopus oocyte maturation. As expected, beta PKC translocation from the cytosol to the particulate fraction of the Xenopus oocytes was inhibited after microinjection of peptide I and induced after microinjection of peptide rVI. Moreover, peptide rVI caused translocation of beta PKC and oocyte maturation without hormone stimulation. In the absence of PKC activators, peptide rVI but not peptide I, activated PKC in vitro as demonstrated in three assays: increased sensitivity to Arg-C endopeptidase, PKC autophosphorylation, and histone phosphorylation. Therefore, although peptides I and rVI have sequence homology, one mimicked hormone-induced PKC-mediated function whereas the other inhibited this hormone-induced function. The molecular mechanisms underlying these opposing effects of the peptides are discussed.