A substrate for the insulin receptor kinase in 3T3-L1 adipocytes has previously been identified as the adipocyte lipid-binding protein (ALBP, also known as aP2 or p15). We have characterized the effect of tyrosyl phosphorylation on ALBP structure and ligand-binding properties. Phosphorylated ALBP (phospho-ALBP) was isolated by a combination of gel filtration, anion exchange chromatography, and immunoaffinity chromatography on anti-phosphotyrosine agarose. Circular dichroic spectroscopy indicated that the phosphoprotein was similar in structure to native ALBP. Phospho-ALBP exhibited a slight decrease in calculated alpha-helical content which was compensated for by an increase in beta-sheet structure. The wavelength yielding maximum tryptophan fluorescence was unaltered by phosphorylation (334 +/- 1 nm). However, the concentration of guanidine HCl yielding 50% denaturation was 1.43 M for ALBP and 0.92 M for phospho-ALBP. The DELTA-G-degrees(app) was 3.87 and 3.25 kcal mol-1 for ALBP and phospho-ALBP, respectively, suggesting that phosphorylation destabilized the protein. To assess the binding characteristics of the phosphoprotein, a long-chain fatty acid affinity column was synthesized to which native ALBP specifically bound. In contrast, phospho-ALBP showed little or no affinity for the column. Furthermore, phosphorylation virtually abolished binding of the fluorescent fatty acid analogue 12-(9-anthroyloxy)oleic acid. Fatty acid binding activity was recovered (approximately 60%) upon dephosphorylation with protein tyrosine phosphatase. The structural studies, coupled with the crystal structure of the apoprotein, indicate that the dramatic reduction in binding affinity is likely a result of steric hindrance in the binding cavity or of electrostatic interactions of the phosphoryl group with the fatty acid. The present study reveals that phosphorylation blocks ligand binding and suggests that an insulin-regulated phosphorylation/dephosphorylation cycle may be utilized for directionally orienting lipid flux in adipocytes.