In vitro, the modulator protein (inhibitor-2) slowly converts the catalytic subunit of protein phosphatase-1 (PP-1C) into an inactive 'MgATP-dependent form' that can be reactivated by the transient phosphorylation of modulator with GSK-3/FA. We report here that this modulator-induced inactivation of PP-1C can be blocked by addition (at pH 7.5) of either 0.3 mM NaF or 150 mM NaCl, or by raising the pH to 8.5. Making use of a combination of the latter conditions, we have partially purified a soluble modulator-associated form of PP-1 (PP-1S) from rabbit skeletal muscle as a spontaneously active enzyme that cannot be further activated by kinase GSK-3/FA. These observations argue against a role for the 'MgATP-dependent' form of PP-1S as an inactive reservoir of PP-1C. PP-1S was separated on aminohexyl Sepharose from another active, cytosolic species of PP-1, which appears to be a proteolytic product of the glycogen-bound PP-1G.