We recently discovered that the constitutively active Src tyrosine kinase can enhance hyperpolarization-activated, cyclic nucleotide-gated (HCN) 4 channel activity by binding to the channel protein. To investigate the mechanism of modulation by Src of HCN channels, we studied the effects of a selective inhibitor of Src tyrosine kinase, 4-amino-5-(4-chlorophenyl)-7-(t-butyl)pyrazolo[3,4-d]pyrimidine (PP2), on HCN4 and its mutant channels expressed in HEK 293 cells by using a whole cell patch-clamp technique. We found that PP2 can inhibit HCN4 currents by negatively shifting the voltage dependence of channel activation, decreasing the whole cell channel conductance, and slowing activation and deactivation kinetics. Screening putative tyrosine residues subject to phosphorylation yielded two candidates: Tyr(531) and Tyr(554). Substituting HCN4-Tyr(531) with phenylalanine largely abolished the effects of PP2 on HCN4 channels. Replacing HCN4-Tyr(554) with phenylalanine did not abolish the effects of PP2 on voltage-dependent activation but did eliminate PP2-induced slowing of channel kinetics. The inhibitory effects of HCN channels associated with reduced Src tyrosine activity is confirmed in HL-1 cardiomyocytes. Finally, we found that PP2 can decrease the heart rate in a mouse model. These results demonstrate that Src tyrosine kinase enhances HCN4 currents by shifting their activation to more positive potentials and increasing the whole cell channel conductance as well as speeding the channel kinetics. The tyrosine residue that mediates most of Src's actions on HCN4 channels is Tyr(531).