Calcium-saturated calmodulin (CaM) directly activates CaM-dependent protein kinase I (CaMKI) by binding to a region in the C-terminal regulatory sequence of the enzyme to relieve autoinhibition. The structure of CaM in a high-affinity complex with a 25-residue peptide of CaMKI (residues 294-318) has been determined by X-ray crystallography at 1.7 A resolution. Upon complex formation, the CaMKI peptide adopts an alpha-helical conformation, while changes in the CaM domain linker enable both its N- and C-domains to wrap around the peptide helix. Target peptide residues Trp-303 (interacting with the CaM C-domain) and Met-316 (with the CaM N-domain) define the mode of binding as 1-14. In addition, two basic patches on the peptide form complementary charge interactions with CaM. The CaM-peptide affinity is approximately 1 pM, compared with 30 nM for the CaM-kinase complex, indicating that activation of autoinhibited CaMKI by CaM requires a costly energetic disruption of the interactions between the CaM-binding sequence and the rest of the enzyme. We present biochemical and structural evidence indicating the involvement of both CaM domains in the activation process: while the C-domain exhibits tight binding toward the regulatory sequence, the N-domain is necessary for activation. Our crystal structure also enables us to identify the full CaM-binding sequence. Residues Lys-296 and Phe-298 from the target peptide interact directly with CaM, demonstrating overlap between the autoinhibitory and CaM-binding sequences. Thus, the kinase activation mechanism involves the binding of CaM to residues associated with the inhibitory pseudosubstrate sequence.