The circadian oscillator of the cyanobacterium Synechococcus elongatus is composed of only three proteins, KaiA, KaiB, and KaiC, which, together with ATP, can generate a self-sustained approximately 24 h oscillation of KaiC phosphorylation for several days. KaiA induces KaiC to autophosphorylate, whereas KaiB blocks the stimulation of KaiC by KaiA, which allows KaiC to autodephosphorylate. We propose and support a model in which the C-terminal loops of KaiC, the "A-loops", are the master switch that determines overall KaiC activity. When the A-loops are in their buried state, KaiC is an autophosphatase. When the A-loops are exposed, however, KaiC is an autokinase. A dynamic equilibrium likely exists between the buried and exposed states, which determines the steady-state level of phosphorylation of KaiC. The data suggest that KaiA stabilizes the exposed state of the A-loops through direct binding. We also show evidence that if KaiA cannot stabilize the exposed state, KaiC remains hypophosphorylated. We propose that KaiB inactivates KaiA by preventing it from stabilizing the exposed state of the A-loops. Thus, KaiA and KaiB likely act by shifting the dynamic equilibrium of the A-loops between exposed and buried states, which shifts the balance of autokinase and autophosphatase activities of KaiC. A-loop exposure likely moves the ATP closer to the sites of phosphorylation, and we show evidence in support of how this movement may be accomplished.