Two novel protein kinases C (PKC), PKCdelta and PKCepsilon, have been reported to have opposing functions in some mammalian cells. To understand the basis of their distinct cellular functions and regulation, we investigated the mechanism of in vitro and cellular sn-1,2-diacylglycerol (DAG)-mediated membrane binding of PKCepsilon and compared it with that of PKCdelta. The regulatory domains of novel PKC contain a C2 domain and a tandem repeat of C1 domains (C1A and C1B), which have been identified as the interaction site for DAG and phorbol ester. Isothermal titration calorimetry and surface plasmon resonance measurements showed that isolated C1A and C1B domains of PKCepsilon have comparably high affinities for DAG and phorbol ester. Furthermore, in vitro activity and membrane binding analyses of PKCepsilon mutants showed that both the C1A and C1B domains play a role in the DAG-induced membrane binding and activation of PKCepsilon. The C1 domains of PKCepsilon are not conformationally restricted and readily accessible for DAG binding unlike those of PKCdelta. Consequently, phosphatidylserine-dependent unleashing of C1 domains seen with PKCdelta was not necessary for PKCepsilon. Cell studies with fluorescent protein-tagged PKCs showed that, due to the lack of lipid headgroup selectivity, PKCepsilon translocated to both the plasma membrane and the nuclear membrane, whereas PKCdelta migrates specifically to the plasma membrane under the conditions in which DAG is evenly distributed among intracellular membranes of HEK293 cells. Also, PKCepsilon translocated much faster than PKCdelta due to conformational flexibility of its C1 domains. Collectively, these results provide new insight into the differential activation mechanisms of PKCdelta and PKCepsilon based on different structural and functional properties of their C1 domains.