In response to DNA damage, eukaryotic cells use a system of checkpoint controls to delay cell-cycle progression. Checkpoint delays provide time for repair of damaged DNA before its replication in S phase and before segregation of chromatids in M phase. The Cds1 (Chk2) tumour-suppressor protein has been implicated in certain checkpoint responses in mammalian cells. It directly phosphorylates and inactivates the mitosis-inducing phosphatase Cdc25 in vitro and is required to maintain the G2 arrest that is observed in response to gamma-irradiation. Cds1 also directly phosphorylates p53 in vitro at a site that is implicated in its stabilization, and is required for stabilization of p53 and induction of p53-dependent transcripts in vivo upon gamma-ionizing radiation. Thus, Cds1 functions in both the G1 and G2 checkpoint responses. Like Cds1, the checkpoint protein kinase ATM (ataxia-telangiectasia-mutated) is required for correct operation of both the G1 and G2 damage checkpoints. ATM is necessary for phosphorylation and activation of Cds1 in vivo and can phosphorylate Cds1 in vitro, although evidence that the sites that are phosphorylated by ATM are required for activation is lacking. Here we show that threonine 68 of Cds1 is the preferred site of phosphorylation by ATM in vitro, and is the principal irradiation-induced site of phosphorylation in vivo. The importance of this phosphorylation site is demonstrated by the failure of a mutant, non-phosphorylatable form of Cds1 to be fully activated, and by its reduced ability to induce G1 arrest in response to ionising radiation.