Changes in protein phosphorylation represent a mechanism that is frequently employed by cells to regulate transcription factor activity. In response to alterations in the extracellular environment, signal transduction pathways target transcription factors, transcriptional coregulators and chromatin-modifying factors, leading to their phosphorylation by protein kinases or dephosphorylation by protein phosphatases. These modifications either positively or negatively regulate transcription factor activity to facilitate a program of gene expression that results in appropriate changes in cell behavior. Protein phosphorylation and dephosphorylation can directly regulate distinct aspects of transcription factor function, including cellular localization, protein stability, protein-protein interactions and DNA binding. The phosphorylation-dependent modulation of the activities of transcriptional coregulators and chromatin-modifying factors can also control transcription factor activity. Here we review recent studies that have led to a better understanding of the mechanisms by which protein phosphorylation and dephosphorylation governs transcription factor function.