Enzyme regulation is an important mechanism for controlling cell proliferation and differentiation in response to extracellular signaling molecules. We have previously reported that a approximately 50 kDa protein (termed Gbetah) consistently copurified with Galphah (transglutaminase II, TGII) and that Gbetah down-regulates the GTPase function of TGII by associating with GDP-bound TGII [Baek et al. (1996) Biochemistry 35, 2651-2657]. In this study, we examined the identity of Gbetah by partial amino acid sequencing and immunological characterizations. The results strongly suggest that Gbetah is a protein known as calreticulin (CRT). When the regulatory role of CRT in the GTPase activity of TGII was examined, CRT inhibited GTP (GTPgammaS) binding and hydrolysis in a concentration-dependent manner. Moreover, CRT interacted only with GDP-bound TGII. These results demonstrate that CRT down-regulates the GTPase activity of TGII by associating with GDP-bound TGII. Studies on the modulation of the TGase activity of TGII revealed that CRT also inhibited TGase activity. The inhibition showed the two characteristics depend on guanine nucleotides occupying the GTPase active site. The inhibition of the "empty" form of the GTPase active site increased the Ca2+ requirement without changing the Vmax. On the other hand, the inhibition of the GDP-bound form decreased Vmax, but did not alter the Ca2+ requirement. Moreover, the GTPgammaS-bound TGII was virtually resistant to Ca2+-mediated stimulation of the TGase activity, indicating that the GTP-bound TGII does not function as a TGase. We concluded that CRT is the regulatory protein of TGII that down-regulates both GTPase and TGase activities, opposing the activators of TGII function.