The diverse roles of protein kinase C-δ (PKCδ) in cellular growth, survival, and injury have been attributed to stimulus-specific differences in PKCδ signaling responses. PKCδ exerts membrane-delimited actions in cells activated by agonists that stimulate phosphoinositide hydrolysis. PKCδ is released from membranes as a Tyr(313)-phosphorylated enzyme that displays a high level of lipid-independent activity and altered substrate specificity during oxidative stress. This study identifies an interaction between PKCδ's Tyr(313)-phosphorylated hinge region and its phosphotyrosine-binding C2 domain that controls PKCδ's enzymology indirectly by decreasing phosphorylation in the kinase domain ATP-positioning loop at Ser(359). We show that wild-type (WT) PKCδ displays a strong preference for substrates with serine as the phosphoacceptor residue at the active site when it harbors phosphomimetic or bulky substitutions at Ser(359.) In contrast, PKCδ-S359A displays lipid-independent activity toward substrates with either a serine or threonine as the phosphoacceptor residue. Additional studies in cardiomyocytes show that oxidative stress decreases Ser(359) phosphorylation on native PKCδ and that PKCδ-S359A overexpression increases basal levels of phosphorylation on substrates with both phosphoacceptor site serine and threonine residues. Collectively, these studies identify a C2 domain-pTyr(313) docking interaction that controls ATP-positioning loop phosphorylation as a novel, dynamically regulated, and physiologically relevant structural determinant of PKCδ catalytic activity.