Microcystin-affinity chromatography was used to purify 15 protein phosphatase 1 (PP1)-binding proteins from the myofibrillar fraction of rabbit skeletal muscle. To reduce the time and amount of material required to identify these proteins, proteome analysis by mixed peptide sequencing was developed. Proteins are resolved by SDS-polyacrylamide gel electrophoresis, electroblotted to polyvinylidene fluoride membrane, and stained. Bands are sliced from the membrane, cleaved briefly with CnBr, and applied without further purification to an automated Edman sequencer. The mixed peptide sequences generated are sorted and matched against the GenBank using two new programs, FASTF and TFASTF. This technology offers a simple alternative to mass spectrometry for the subpicomolar identification of proteins in polyacrylamide gels. Using this technology, all 15 proteins recovered in PP- 1C affinity chromatography were sequenced. One of the proteins, PP-1bp55, was homologous to human myosin phosphatase, MYPT2. A second, PP-1bp80, identified in the EST data bases, contained a putative PP-1C binding site and a nucleotide binding motif. Further affinity purification over ATP-Sepharose isolated PP-1bp80 in a quaternary complex with PP-1C and two other proteins, PP-1bp29 and human p20. Recombinant PP-1bp80 also bound PP-1C and suppressed its activity toward a variety of substrates, suggesting that the protein is a novel regulatory subunit of PP-1.