We have investigated the role of protein phosphorylation in regulation of Saccharomyces cerevisiae kinetochores. By use of phosphatase inhibitors and a type 1 protein phosphatase mutant (glc7-10), we show that the microtubule binding activity, but not the centromeric DNA-binding activity, of the kinetochore complex is regulated by a balance between a protein kinase and the type 1 protein phosphatase (PP1) encoded by the GLC7 gene. glc7-10 mutant cells exhibit low kinetochore-microtubule binding activity in vitro and a high frequency of chromosome loss in vivo. Specifically, the Ndc10p component of the centromere DNA-binding CBF3 complex is altered by the glc7-10 mutation; Ndc10p is hyperphosphorylated in glc7-10 extracts. Furthermore, addition of recombinant Ndc10p reconstitutes the microtubule-binding activity of a glc7-10 extract to wild-type levels. Finally, the glc7-10-induced mitotic arrest is abolished in spindle checkpoint mutants, suggesting that defects in kinetochore-microtubule interactions caused by hyperphosphorylation of kinetochore proteins activate the spindle checkpoint.