Large-cell anaplastic lymphoma is a subtype of non-Hodgkin’s lymphoma characterized by the expression of CD30. More than half of these lymphomas have a chromosomal translocation, t(2;5), that leads to the expression of a hybrid protein comprised of the nucleolar phosphoprotein nucleophosmin (NPM) and the anaplastic lymphoma kinase (ALK). Here we show that transfection of the constitutively active tyrosine kinase NPM-ALK into Ba/F3 and Rat-1 cells leads to a transformed phenotype. Oncogenic tyrosine kinases transform cells by activating the mitogenic signal transduction pathways, e.g., by binding and activating SH2-containing signaling molecules. We found that NPM-ALK binds most specifically to the SH2 domains of phospholipase C-γ (PLC-γ) in vitro. Furthermore, we showed complex formation of NPM-ALK and PLC-γ in vivo by coimmunoprecipitation experiments in large-cell anaplastic lymphoma cells. This complex formation leads to the tyrosine phosphorylation and activation of PLC-γ, which can be corroborated by enhanced production of inositol phosphates (IPs) in NPM-ALK-expressing cells. By phosphopeptide competition experiments, we were able to identify the tyrosine residue on NPM-ALK responsible for interaction with PLC-γ as Y664. Using site-directed mutagenesis, we constructed a comprehensive panel of tyrosine-to-phenylalanine NPM-ALK mutants, including NPM-ALK(Y664F). NPM-ALK(Y664F), when transfected into Ba/F3 cells, no longer forms complexes with PLC-γ or leads to PLC-γ phosphorylation and activation, as confirmed by low IP levels in these cells. Most interestingly, Ba/F3 and Rat-1 cells expressing NPM-ALK(Y664F) also show a biological phenotype in that they are not stably transformed. Overexpression of PLC-γ can partially rescue the proliferative response of Ba/F3 cells to the NPM-ALK(Y664F) mutant. Thus, PLC-γ is an important downstream target of NPM-ALK that contributes to its mitogenic activity and is likely to be important in the molecular pathogenesis of large-cell anaplastic lymphomas.