The transmembrane proteoglycan syndecan-4, which is a coreceptor with integrins in cytoskeleton-matrix interactions, appears to be multimerized in vivo. Both purified and recombinant core proteins form sodium dodecyl sulfate-resistant oligomers, and we now report that a synthetic peptide corresponding to the central region of syndecan-4 cytoplasmic domain (4V) also oligomerizes. The degree of oligomerization correlates with the previously reported ability to bind protein kinase C (PKC) and regulate its activity. Only multimeric recombinant syndecan-4 core protein, but not the monomeric protein, potentiated the activity of PKCalpha, and only oligomeric syndecan-4 cytoplasmic peptides were active. Changes in peptide sequence caused parallel loss of stable oligomeric status and ability to regulate a mixture of PKCalphabetagamma activity. A synthetic peptide encompassing the whole cytoplasmic domain of syndecan-4 (4L) containing a membrane-proximal basic sequence did not form higher order oligomers and could not regulate the activity of PKCalphabetagamma unless induced to aggregate by phosphatidylinositol 4,5-bisphosphate. Oligomerization and PKC regulatory activity of the 4V peptide were both increased by addition of N-terminal cysteine and reduced by phosphorylation of the cysteine thiol group. Concentration of syndecan-4 at sites of focal adhesion formation may enhance multimerization and both localize PKC and potentiate its activity to induce stable complex formation.