Quenching of phototransduction in retinal rod cells involves phosphorylation of photoactivated rhodopsin by the enzyme rhodopsin kinase followed by binding of the protein arrestin. Although it has been proposed that the mechanism of arrestin quenching of visual transduction is via steric exclusion of transducin binding to phosphorylated light-activated rhodopsin (P-Rh*), direct evidence for this mechanism is lacking. In this study, we investigated both the role of rhodopsin phosphorylation in modulating its interaction with arrestin and transducin and the proposed binding competition between arrestin and transducin for P-Rh*. While the beta-adrenergic receptor kinase promotes significant arrestin binding to rhodopsin at a phosphorylation stoichiometry of >/=2 mol/mol, rhodopsin kinase promotes arrestin binding at a stoichiometry of approximately 0.9 mol/mol. Moreover, while beta-adrenergic receptor kinase phosphorylation of rhodopsin only modestly decreases transducin binding and activation, rhodopsin kinase phosphorylation of rhodopsin significantly decreases transducin binding and activation. Finally, arrestin competes effectively with transducin for binding to P-Rh* (50% inhibition at approximately 1:1 molar ratio of arrestin:transducin) but has no effect on transducin binding to nonphosphorylated light-activated rhodopsin (Rh*), paralleling the functional inhibition by arrestin on P-Rh*-stimulated transducin activation (50% inhibition at approximately 1.7:1 molar ratio of arrestin:transducin). These results demonstrate that a major role of rhodopsin phosphorylation is to promote high-affinity arrestin binding and decrease transducin binding thus allowing arrestin to effectively compete with transducin for binding to photoactivated rhodopsin.