Phosphorylation of c-Src at carboxyl-terminal Tyr-527 suppresses tyrosine kinase activity and transforming potential, presumably by facilitating the intramolecular interaction of the C terminus of Src with its SH2 domain. In addition, it has been shown previously that occupancy of the c-Src SH2 domain with a phosphopeptide stimulates c-Src kinase catalytic activity. We have performed analogous studies with v-Src, the transforming protein from Rous sarcoma virus, which has extensive homology with c-Src. v-Src lacks an autoregulatory phosphorylation site, and its kinase domain is constitutively active. Phosphopeptides corresponding to the sequences surrounding c-Src Tyr-527 and a Tyr-Glu-Glu-Ile motif from the hamster polyoma virus middle T antigen inhibit tyrosine kinase activity of baculovirus-expressed v-Src 2- and 4-fold, respectively. To determine the mechanism of this regulation, the Tyr-527 phosphopeptide was substituted with the photoactive amino acid p-benzoylphenylalanine at the adjacent positions (N- and C-terminal) to phosphotyrosine. These peptides photoinactivate the v-Src tyrosine kinase 5-fold in a time- and concentration-dependent manner. Furthermore, the peptides cross-link an isolated Src SH2 domain with similar rates and specificity. These data indicate that occupancy of the v-Src SH2 domain induces a conformational change that is transmitted to the kinase domain and attenuates tyrosine kinase activity.