Phosphorylation regulation of postsynaptic density proteins is likely to be a major means of regulating synaptic function. The PSD scaffold PSD-95, a powerful determinant of synaptic strength, is a case in point. Its precise role during synaptic plasticity (LTP versus LTD) has not been easy to interpret from overexpression, RNAi or knockout mice experiments. We found that the PSD scaffold PSD-95 is phosphorylated on multiple sites in cultured neurons and in vivo. Ser-295 phosphorylation, mediated by a Rac1-JNK1 MAP kinase pathway and countered by phosphatases PP1 or PP2A, promotes PSD-95 accumulation in synapses and is associated with LTP-inducing stimuli. More strikingly, LTD-inducing stimuli causes dephosphorylation of ser-295 rapidly and profoundly, correlating with activation of PP1. In addition, LTD was associated with phosphorylation of an N-terminal residue of PSD-95 by the protein kinase GSK3b. This site is also bidirectionally modulated by activity. A phospho-mimicking mutant of PSD-95 (S295DPSD-95; which cannot be “dephosphorylated”) impaired the internalization of AMPA receptors in cultured neurons and blocked the induction of LTD in cultured hippocampal slices. Our data indicate that dephosphorylation of PSD-95 on ser295, and phosphorylation of the N-terminus of PSD-95, is required for mobilization of PSD-95 from the PSD, de-anchoring of AMPA receptors from the PSD for internalization, and hence induction of LTD.