It is now apparent that the double-stranded (ds)RNA-dependent protein kinase, PKR, is a regulator of diverse cellular responses to stress. Recently, the murine dsRNA-binding protein RAX and its human ortholog PACT were identified as cellular activators of PKR. Previous reports demonstrate that following stress, RAX/PACT associates with and activates PKR resulting in eIF2alpha phosphorylation, consequent translation inhibition, and cell death via apoptosis. Although RAX/PACT is phosphorylated during stress, any regulatory role for this post-translational modification has been uncertain. Now we have discovered that RAX is phosphorylated on serine 18 in both human and mouse cells. The non-phosphorylatable form of RAX, RAX(S18A), although still able to bind dsRNA and associate with PKR, fails to activate PKR following stress. Furthermore, stable expression of RAX(S18A) results in a dominant-negative effect characterized by deficiency of eukaryotic initiation factor 2 alpha subunit phosphorylation, delay of translation inhibition, and failure to undergo rapid apoptosis following removal of interleukin-3. We propose that the ability of RAX to activate PKR is regulated by a sequential mechanism featuring RAX association with PKR, RAX phosphorylation at serine 18, and activation of PKR.