The crystal structure of transducin's βγ subunits complexed with phosducin, which regulates Gtβγ activity, has been solved to 2.4 Å resolution. Phosducin has two domains that wrap around Gtβγ to form an extensive interface. The N-terminal domain binds loops on the “top” Gtβ surface, overlapping the Gtα binding surface, explaining how phosducin blocks Gtβγ's interaction with Gtα. The C-terminal domain shows structural homology to thioredoxin and binds the outer strands of Gtβ's seventh and first blades in a manner likely to disrupt Gtβγ's normal orientation relative to the membrane and receptor. Phosducin's Ser-73, which when phosphorylated inhibits phosducin's function, points away from Gtβγ, toward a large flexible loop. Thus phosphorylation is not likely to affect the interface directly, but rather indirectly through an induced conformational change.