Phospholemman (PLM) is the first sequenced member of the FXYD family of regulators of ion transport. The mature protein has 72 amino acids and consists of an extracellular N terminus containing the signature FXYD motif, a single transmembrane (TM) domain, and a cytoplasmic C-terminal domain containing four potential sites for phosphorylation. PLM and other members of the FXYD family are known to regulate Na+-K+-ATPase. Using adenovirus-mediated gene transfer into adult rat cardiac myocytes, we showed that changes in contractility and intracellular Ca2+ homeostasis associated with PLM overexpression or downregulation are not consistent with the effects expected from inhibition of Na+-K+-ATPase by PLM. Additional studies with heterologous expression of PLM and cardiac Na+/Ca2+ exchanger 1 (NCX1) in HEK293 cells and cardiac myocytes isolated from PLM-deficient mice demonstrated by co-localization, co-immunoprecipitation, and electrophysiological and radioactive tracer uptake techniques that PLM associates with NCX1 in the sarcolemma and transverse tubules and that PLM inhibits NCX1, independent of its effects on Na+-K+-ATPase. Mutational analysis indicates that the cytoplasmic domain of PLM is required for its regulation of NCX1. In addition, experiments using phosphomimetic and phospho-deficient PLM mutants, as well as activators of protein kinases A and C, indicate that PLM phosphorylated at serine68 is the active form that inhibits NCX1. This is in sharp contrast to the finding that the unphosphorylated PLM form inhibits Na+-K+-ATPase. We conclude that PLM regulates cardiac contractility by modulating the activities of NCX and Na+-K+-ATPase.