The transacetylase component (E2) of PDC (pyruvate dehydrogenase complex) plays a critical role in the regulation of PDHK (pyruvate dehydrogenase kinase) activity. The present study was undertaken to investigate further the molecular mechanism by which E2 modulates the activity of PDHK. In agreement with the earlier results, it was found that the inner L2 (lipoyl-bearing domain 2) of E2 expressed with or without the C-terminal hinge region had little, if any, effect on the kinase activity, indicating a lack of direct allosteric effect of L2 on PDHK. In marked contrast, significant activation of PDHK was observed with the construct consisting of L2 and the E1BD (E1-binding domain) of E2 (L2-E1BD didomain) suggesting that co-localization and/or mutual orientation of PDHK and E1, facilitated by E2 binding, largely account for the activation of PDHK by the transacetylase component. Isothermal titration calorimetry and glutathione S-transferase pull-down assays established that binding of adenyl nucleotides to the PDHK molecule facilitated the release of L2 domain. In contrast, binding of the L2 domain caused a significant decrease in the affinity of PDHK for ATP. The cross-talk in binding of adenyl nucleotides and the L2 domain to PDHK may indicate the existence of a highly integrated mechanism whereby the exchange of lipoyl-bearing domains presented to PDHK by E2 is coupled with ADP/ATP exchange. © 2005 Biochemical Society.