Signaling proteins comprised of modular domains have evolved along with multicellularity as a method to facilitate increasing intracellular bandwidth. The effects of intramolecular interactions between modular domains within the context of native proteins have been largely unexplored. Here we examine intra- and intermolecular interactions in the multidomain signaling protein, protein kinase Cα (PKCα). We identify three interactions between two activated PKC molecules that synergistically stabilize a nanomolar affinity homodimer. Disruption of the homodimer results in a loss of PKC-mediated ERK1/2 phosphorylation, whereas disruption of the auto-inhibited state promotes the homodimer and prolongs PKC membrane localization. These observations support a novel regulatory mechanism wherein homodimerization dictates the equilibrium between the auto-inhibited and active states of PKC by sequestering auto-inhibitory interactions. Our findings underscore the physiological importance of context-dependent modular domain interactions in cell signaling.