Protein kinase C-theta (PKC-theta) is a central signaling molecule in the T cell receptor activation pathway and is a target for treatment of a number of diseases. Several PKC inhibitors are in the drug-discovery pharmaceutical programs today for the treatment of cancer, diabetes and arthritis. CD4+ T lymphocytes also play a critical role in the initiation and progression of allergic airway inflammation. Our goal is the development of PKC-theta antagonists as a means to control asthma and autoimmune diseases (1), with the strategy based on developing small molecule agents that would block the enzyme’s catalytic activity. Implementation of this strategy led to the discovery of two lead chemical series, which are being synthesized and characterized in enzymatic and cell assays. To help guide the optimization of these compounds, structural and modeling approaches, including site-directed mutation and a structure-surrogate strategy, have been developed. We first obtained structural information using X-ray crystallography, revealing the association between staurosporine and the PKC-theta ATP-binding site (2, 3), and this complex was used as a surrogate structure for subsequent high-throughput docking studies with inhibitors under development. Our attempts of solving crystal structures of advanced hits with wild type PKC-theta, as well as with the designed PKC-theta mutants (site-directed surface mutants), have repeatedly led to a crystal form with poor diffraction (~ 6 A resolution at best). Through an iterative process of chemical synthesis, molecular modeling and biochemical testing we have found highly potent sub-nanomolar inhibitors, but they suffered from lack of selectivity over Src kinases. To address this issue, we determined the crystal structures of several lead compounds with a Src kinase. These co-structures revealed interaction of headpiece with Glu 428, which we never observed in binding mode predictions with PKC-theta due to small difference in protein conformation. Consequently, the SAR around the headpiece become well explained with this ‘hybrid’ PKC-theta model, where parts being modeled based on Src kinase co-structures. The results of this structural effort helped produce compounds with significant selectivity improvements over the initial lead molecules. To further enhance structure-guided lead optimization we are also pursuing a PKA-based surrogate approach. Production, characterization and use of different PKA-PKCtheta chimeras as a structural mimic are discussed and details presented.