Vav works as a GDP/GTP exchange factor for Rac GTPases, thereby facilitating the transition of these proteins from the inactive (GDP-bound) into the active (GTP-bound) state. The stimulation of Vav exchange activity during cell signaling is mediated by tyrosine phosphorylation. To understand the roles of phosphorylation in the regulation of Vav activity, we have initiated the characterization of the residues of Vav that are phosphorylated during signal transduction. Here we show that a Y-to-F mutation in one of these residues, Y174, leads to the oncogenic activation of Vav and to the enhancement of other Vav-mediated signals such as those for cytoskeletal reorganization, JNK activation, and stimulation of the nuclear factor of activated T cells. The effect induced by the Y174F mutation is further accentuated by mutations in residue Y142 or Y160. The Y174F mutation has no effect on the exchange activity of Vav in vitro but results in higher levels of phosphorylation in vivo. Using a phosphospecific antibody, we found that Y174 is phosphorylated following stimulation of mitogenic and antigenic receptors. This phosphorylation event is conserved in Vav-2 and Vav-3, the other two members of the Vav family. These results identify a previously unknown mechanism for the oncogenic activation of Vav and suggest that the activity of this exchange factor is modulated by two antagonistic phosphorylation events, one involved in Vav activation and a second one implicated in Vav inactivation.