Both keratohyalin granules (KHG) and cornified envelopes were stained histochemically in an indirect immunofluorescent study by anti-phosphorylated cystatin-alpha antibody, indicating that phosphorylated cystatin-alpha is a component of the cornified envelope proteins. When phosphorylated cystatin-alpha (P-cystatin-alpha) was incubated with epidermal transglutaminase (TGase) and Ca2+ ions, polymerized protein was produced by formation of epsilon-(gamma-glutamyl)lysine cross-linking peptide bonds between lysine residues of cystatin-alpha and glutamine residues of suitable protein(s) in the enzyme preparation. However, phosphorylated and non-phosphorylated cystatins were polymerized to similar extents by the TGase. Immunofluorescent and immunoelectron microscopic observations revealed that P-cystatin-alpha could be detected in vivo in the KHG and cornified envelopes. Treatment of sphingosine, a specific inhibitor of protein kinase C, markedly suppressed the incorporation of cystatin-alpha into KHG. Thus phosphorylation of cystatin-alpha by protein kinase C may play an important role in targeting cystatin-alpha into KHG.