To determine the role of protein phosphorylation in neutrophil activation, electropermeabilized cells were treated with vanadate, a phosphatase inhibitor. Micromolar concentrations of vanadate elicited a NADPH-dependent burst of oxygen utilization in permeabilized, but not in intact cells, indicating an intracellular site of action. Stimulation of oxygen consumption by vanadate was reversible, concentration dependent and required the presence of ATP and Mg2+. Generation of a respiratory burst by vanadate was associated with accumulation of phosphorylated proteins. Such accumulation was due, at least in part, to inhibition of phosphoprotein phosphatase activity, as indicated by pulse-chase experiments. No evidence for stimulation of protein kinases by vanadate was found. Phosphoamino acid analysis revealed that a large fraction of the vanadate-induced phosphorylation occurred on tyrosine residues. The pronounced accumulation of tyrosine-phosphorylated proteins was confirmed by immunoblotting with anti-phosphotyrosine antibodies. The data suggest that neutrophils possess one or more constitutively active tyrosine kinases and that phosphoprotein accumulation is normally prevented by vigorous concomitant phosphatase activity. Inhibition of the latter by vanadate leads to phosphoprotein accumulation and is accompanied by stimulation of oxygen consumption.