In the accompanying paper (Chung, J.-K., Sekiya, F., Kang, H.-S., Lee, C., Han, J.-S., Kim, S. R., Bae, Y. S., Morris, A. J., and Rhee, S. G. (1997) J. Biol. Chem. 272, 15980-15985), synaptojanin is identified as a protein that inhibits phospholipase D (PLD) activity stimulated by ADP-ribosylation factor and phosphatidylinositol 4,5-bisphosphate (PI(4,5)P2). Here, the purification from rat brain cytosol of another PLD-inhibitory protein that is immunologically distinct from synaptojanin is described, and this protein is identified as clathrin assembly protein 3 (AP3) by peptide sequencing and immunoblot analysis. AP3 binds both inositol hexakisphosphate and preassembled clathrin cages with high affinity. However, neither inositol hexakisphosphate binding nor clathrin cage binding affected the ability of AP3 to inhibit PLD. AP3 also binds to PI(4,5)P2 with low affinity. But the PI(4,5)P2 binding was not responsible for PLD inhibition, because the potency and efficacy of AP3 as an inhibitor of PLD were similar in the absence and presence of PI(4,5)P2. A bacterially expressed fusion protein, glutathione S-transferase-AP3 (GST-AP3), also inhibited PLD with a potency equal to that of brain AP3. The inhibitory effect of AP3 appeared to be the result of direct interaction between AP3 and PLD because PLD bound GST-AP3 in an in vitro binding assay. Using GST fusion proteins containing various AP3 sequences, we found that the sequence extending from residues Pro-290 to Lys- 320 of AP3 is critical for both inhibition of and binding to PLD. The fact that AP3 is a synapse-specific protein indicates that the AP3-dependent inhibition of PLD might play a regulatory role that is restricted to the rapid cycling of synaptic vesicles.