The sarco(endo)plasmic reticulum calcium ATPase (SERCA) and its regulatory partner phospholamban (PLN) are essential for myocardial contractility. Arg(9) → Cys (R9C) and Arg(14) deletion (R14del) mutations in PLN are associated with lethal dilated cardiomyopathy in humans. To better understand these mutations, we made a series of amino acid substitutions in the cytoplasmic domain of PLN and tested their ability to inhibit SERCA. R9C is a complete loss-of-function mutant of PLN, whereas R14del is a mild loss-of-function mutant. When combined with wild-type PLN to simulate heterozygous conditions, the mutants had a dominant negative effect on SERCA function. A series of targeted mutations in this region of the PLN cytoplasmic domain ((8)TRSAIRR(14)) demonstrated the importance of hydrophobic balance in proper PLN regulation of SERCA. We found that Arg(9) → Leu and Thr(8) → Cys substitutions mimicked the behavior of the R9C mutant, and an Arg(14) → Ala substitution mimicked the behavior of the R14del mutant. The results reveal that the change in hydrophobicity resulting from the R9C and R14del mutations is sufficient to explain the loss of function and persistent interaction with SERCA. Hydrophobic imbalance in the cytoplasmic domain of PLN appears to be a predictor for the development and progression of dilated cardiomyopathy.