The multitude of mechanisms regulating the activity of protein kinases includes phosphorylation of amino acids contained in the activation loop. Here we show that the serine/threonine kinase HIPK2 (homeodomain-interacting protein kinase 2) is heavily modified by autophosphorylation, which occurs by cis-autophosphorylation at the activation loop and by trans-autophosphorylation at other phosphorylation sites. Cis-autophosphorylation of HIPK2 at Y354 and S357 in the activation loop is essential for its kinase function and the binding to substrates and the interaction partner Pin1. HIPK2 activation loop phosphorylation is also required for its biological activity as a regulator of gene expression and cell proliferation. Phosphorylation of HIPK2 at Y354 alone is not sufficient for full HIPK2 activity, which is in marked contrast to some dual-specificity tyrosine-phosphorylated and regulated kinases where tyrosine phosphorylation is absolutely essential. This study shows that differential phosphorylation of HIPK2 provides a mechanism for controlling and specifying the signal output from this kinase.