The bacterial chemotaxis system is one of the most extensively studied signal transduction systems in biology. The response regulator CheY controls flagellar rotation and is phosphorylated by the CheA histidine kinase to its active form. CheC is a CheY-P phosphatase and this activity is enhanced in a CheC/CheD heterodimer. CheC is also critical for chemotactic adaptation, the return to the prestimulus system state despite persistent attractant concentrations. Here, CheC point mutants were examined in Bacillus subtilis for in vivo complementation and in vitro activity. Mutants were identified separating the three known abilities of CheC: CheD binding, CheY-P binding, and CheY-P phosphatase activity. Remarkably, the phosphatase ability was not as critical to the in vivo function of CheC as were the ability to bind both CheY-P and CheD. Additionally, it was confirmed that CheY-P increases CheC’s affinity for CheD, the later of which is known to be necessary for receptor activation of CheA. This data suggests a model of CheC as a CheY-P induced regulator of CheD. Here, CheY-P would cause CheC to sequester CheD from the chemoreceptors, inducing adaptation of the chemotaxis system. This model represents the first plausible means for feedback from the output of the system, CheY-P, to the receptors.