The protooncogene product Cbl has emerged as a novel signal transduction protein downstream of a number of cell surface receptors coupled to tyrosine kinases. Recently, we and others have reported the activation-dependent association of Cbl with the Syk and ZAP-70 tyrosine kinases through presently undefined mechanisms. Potential Src homology 2 and 3 domain binding sites within the C-terminal half of Cbl mediate in vivo interactions with several signaling proteins; however, the N-terminal transforming region (Cbl-N) lacks recognizable catalytic or protein interaction motifs. Here, we show that in vitro Cbl-N (amino acids 1-357) but not Cbl-C (amino acids 358-906) binds to ZAP-70 in a T cell-activation-dependent manner. A point mutation in Cbl-N, G306E, corresponding to a loss-of-function mutation in the Caenorhabditis elegans Cbl homologue, SLI-1, severely compromised Cbl-N/ZAP-70 binding. Cbl-N/ZAP-70 binding was direct and phosphotyrosine-dependent, thus identifying a phosphotyrosine-binding domain within the transforming region of Cbl. In vivo, Cbl-N expressed in T cells selectively associated with the ZAP-70/zeta complex. These results identify a novel mechanism for the direct participation of the N-terminal region of Cbl in ZAP-70 signal transduction, and suggest a biochemical mechanism for the leukemogenicity of the oncogene v-cbl through potential interaction with proliferation-related phosphotyrosyl proteins.