Signal transduction by T and B cell Ag receptors and certain receptors for Ig Fc regions (Fc gamma RI, hFc gamma RIIA, Fc gamma RIII, Fc alpha R, and Fc epsilon RI) involves a conserved sequence motif, termed an immunoreceptor tyrosine-based activation motif (ITAM) and found in multiple receptor chains. Phosphorylation of the two ITAM tyrosines is a critical event in signal transduction. To address the function of this phosphorylation, we assessed the ability of nonphosphorylated and biphosphorylated ((p)2ITAM) ITAM peptides to bind and modify the activity of src and syk family kinases in vivo and in vitro. All (p)2ITAMs, but not their nonphosphorylated counterparts, induced extensive protein tyrosine phosphorylation in permeabilized cells. However, the patterns of proteins phosphorylated differed among (p)2ITAMs. This phosphorylation was found to reflect activation of the src family kinase Lyn, but not Syk. In vitro studies using purified Lyn showed that src family kinase activation resulted from a direct interaction with (p)2ITAM. Binding studies demonstrated clear differences in binding specificity of (p)2ITAMs. Most strikingly, Ig alpha (p)2ITAM and TCR-zeta c and CD3 epsilon (p)2ITAMs exhibit inverse binding preferences for src and syk family kinases. Taken together, these findings demonstrate a novel mechanism by which src family tyrosine kinases are activated, and are consistent with the possibility that different ITAMs may preferentially activate distinct signaling pathways as a consequence of distinct effector Src homology 2 domain (SH2) binding preference.