Epithelial cell adhesion molecule (EpCAM) is a cell-surface protein highly expressed in embryonic tissues and in malignant carcinomas. We report that EpCAM acts as a potent inhibitor of novel protein kinase C (nPKC) in both embryos and cancer cells. We observed dramatic effects of loss of EpCAM on amphibian embryonic tissues, which include sequentially strong overstimulation of PKC activity and of the Erk pathway, leading to exacerbated myosin contractility, loss of cadherin-mediated adhesion, tissue dissociation, and, ultimately, cell death. We show that PKC inhibition is caused by a short segment of the EpCAM cytoplasmic tail. This motif resembles the pseudosubstrate inhibitory domains of PKCs and binds nPKCs with high affinity. A bioinformatics search reveals the existence of similar motifs in other plasma membrane proteins, most of which are cell-cell adhesion molecules. Thus, direct inhibition of PKC by EpCAM represents a general mode of regulation of signal transduction by cell-surface proteins.