The transforming potential and by inference the physiological function of the proto-oncoprotein pp60c-src closely correlate with the level of its protein tyrosine kinase activity. We have investigated the cell cycle-dependent regulation of this activity using mouse fibroblasts overexpressing chicken or mouse pp60c-src as a model system. During mitosis pp60c-src becomes phosphorylated at specific serine and threonine residues by p34cdc2. At the same time its tyrosine kinase activity, assayed in vitro, is increased approximately twofold and accessibility of its SH2 domain for binding relevant phosphotyrosine-containing ligands increases by about 15-fold. A kinase-defective mutant of pp60c-src exhibits a substantial (50-70%) decrease in phosphorylation at Tyr527 during mitosis. Phosphorylation of this residue negatively regulates kinase activity. Indirect evidence indicates a lesser decrease in wild-type pp60c-src Tyr527 phosphorylation during mitosis. Coordinate mutation of the mitosis-specific phosphorylation (MSP) sites in kinase-defective pp60c-src greatly reduces, though does not abolish, its mitosis-specific tyrosine dephosphorylation. Similarly, coordinate mutation of the three MSP sites in chicken pp60c-src or the corresponding two sites in mouse pp60c-src does not completely block mitotic stimulation of kinase activity. Thus, additional events beyond p34cdc2-mediated phosphorylation are involved in cell-cycle dependent regulation of pp60c-src activity. This is also suggested by the stimulation of pp60c-src kinase activity and decrease in phosphorylation of Tyr527 observed following treatment of fibroblasts with okadaic acid, a potent inhibitor of types 1 and 2A serine/threonine phosphatases. The potential role of cell cycle-dependent regulation of phosphatases and kinases acting on the regulatory tyrosine residue of pp60c-src is discussed.