Cyclic GMP modulates gene expression in vascular smooth muscle cells (SMCs) in part by stimulating cGMP-dependent protein kinase I (PKGI) and the phosphorylation of transcription factors. In some cells, cGMP increases nuclear translocation of PKGI and PKGI-dependent phosphorylation of transcription regulators; however, these observations have been variable, and the mechanisms mediating nuclear PKGI translocation are incompletely understood. We tested the hypothesis that proteolytic cleavage of PKGI is required for cGMP-stimulated nuclear compartmentation of PKGI and phosphorylation of transcription factors. We detected an NH₂-terminal PKGI fragment with leucine zipper domain immunoreactivity in the cytosol and endoplasmic reticulum of SMCs, but only a COOH-terminal PKGI fragment containing the catalytic region (now termed PKGI) was observed in the Golgi apparatus (GA) and nucleoplasm. Posttranslational PKGI processing in the GA was critical for nuclear compartmentation of PKGI because GA disruption with nocodazol or brefeldin A inhibited PKGI nuclear localization. PKGI immunoreactivity was particularly abundant in the nucleolus of interphase SMCs where its colocalization with the nucleolar dense fibrillar component protein fibrillarin closely matched the level of nucleolar assembly. Purified nucleolar PKGI enzyme activity was insensitive to cGMP stimulation, which is consistent with its lack of the NH₂-terminal autoinhibitory domain. Mutation of a putative proteolytic cleavage region in PKGI inhibited cGMP-mediated phosphorylation of cAMP response element-binding protein, cAMP response element-dependent transcription, and nuclear localization of PKGI. These observations suggest that posttranslational modification of PKGI critically influences the nuclear translocation of PKGI and activities of cGMP in SMCs.