The protein product of the CT10 virus, p47 gag-crk (v-Crk), which contains Src homology region 2 (SH2) and 3 (SH3) domains but lacks a kinase domain, is believed to cause an increase in cellular protein tyrosine phosphorylation. A candidate tyrosine kinase, Csk (C-terminal Src kinase), has been implicated in c-Src Tyr-527 phosphorylation, which negatively regulates the protein tyrosine kinase of pp60 c-src (c-Src). To investigate how c-Src kinase activity is regulated in vivo, we first looked at whether v-Crk can activate c-Src kinase. We found that cooverexpression of v-Crk and c-Src caused elevation of c-Src kinase activity, resulting in an increase of tyrosine phosphoiylation of cellular proteins and morphological transformation of rat 3Y1 fibroblasts. v-Crk and c-Src complexes were not detected, although v-Crk bound to a variety of tyrosine-phosphorylated proteins in cells overexpressing v-Crk and c-Src. Overexpression of Csk in these transformed cells caused reversion to normal phenotypes and also reduced the level of c-Src kinase activity. However, Csk did not cause reversion of cells transformed by v-Src or c-Src527F, in which Tyr-527 was changed to Phe. These results strongly suggest that Csk acts on Tyr-527 of c-Src and suppresses c-Src kinase activity in vivo. Because Csk can suppress transformation by cooverexpression of v-Crk and c-Src, we suggest that v-Crk causes activation of c-Src in vivo by altering the phosphoiylation state of Tyr-527.