Activation of growth factor receptor protein tyrosine kinases frequently results in the binding of numerous proteins to their tyrosine-phosphorylated cytoplasmic domains. These interactions involve the SH2 domains of the binding proteins and phosphorylated tyrosines on the receptor molecules, with the specificity of interaction dictated by the amino acid composition surrounding the phosphorylated tyrosine. In the case of the platelet-derived growth factor (PDGF) receptor, the major binding site for Src family tyrosine kinases is in the juxtamembrane domain and includes tyrosine 579 (Mori, S., Rönnstrand, L., Yokote, K., Engström, A., Courtneidge, S. A., Claesson-Welsh, L., and Heldin, C-H. (1993) EMBO J. 12, 2257-2264). To analyze in more detail which amino acids surrounding the phosphorylated tyrosine at position 579 were important for high affinity interaction with Src family kinases, we synthesized a series of phosphopeptides corresponding to this binding site in which single amino acids were individually changed and tested their ability to compete with the PDGF receptor for binding of Fyn. We found that not only the three residues carboxyl-terminal to the phosphorylated tyrosine were important but that also residues at positions -1 and +4 relative to the tyrosine were required. Phosphorylation of both tyrosines 579 and 581 significantly increased competition efficiency. The activated colony stimulating factor-1 (CSF-1) receptor, which is known to associate with Src family kinases, has a sequence in its juxtamembrane region similar to that surrounding Tyr-579 of the PDGF receptor, and a phosphopeptide modeled on this sequence competed the association of Fyn with the receptor in vitro. Furthermore, mutational analysis demonstrated that these sequences were required for the efficient association of Src family kinases with the activated CSF-1 receptor in vivo. Phosphopeptides corresponding to the Src family binding sites of both PDGF and CSF-1 receptors activated Src kinase activity in vitro. These observations support a model in which the enzymatic activity of Src family tyrosine kinases is controlled by intra- and intermolecular interactions of tyrosine-phosphorylated peptides with the SH2 domain of the kinases.