Mechanisms coupling the atypical PKC (aPKC) kinase activity to its subcellular localization are essential for cell polarization. Unlike other members of the PKC family, aPKC has no well-defined plasma membrane (PM) or calcium binding domains, leading to the assumption that its subcellular localization relies exclusively on protein-protein interactions. Here we show that in both Drosophila and mammalian cells, the pseudosubstrate region (PSr) of aPKC acts as a polybasic domain capable of targeting aPKC to the PM via electrostatic binding to PM PI4P and PI(4,5)P2. However, physical interaction between aPKC and Par-6 is required for the PM-targeting of aPKC, likely by allosterically exposing the PSr to bind PM. Binding of Par-6 also inhibits aPKC kinase activity, and such inhibition can be relieved through Par-6 interaction with apical polarity protein Crumbs. Our data suggest a potential mechanism in which allosteric regulation of polybasic PSr by Par-6 couples the control of both aPKC subcellular localization and spatial activation of its kinase activity.