Tyrosine-specific protein phosphorylation has been implicated in the regulation of cell transformation and proliferation. However, recent studies have shown that the expression of protein tyrosine kinases in adult brain is very high, suggesting that tyrosine-specific protein phosphorylation may also have a role in the regulation of neuronal function. Although a number of substrate proteins are phosphorylated on tyrosine residues, the functional alteration of proteins by tyrosine phosphorylation has previously been convincingly demonstrated only for protein tyrosine kinases. The nicotinic acetylcholine receptor, a neurotransmitter-gated ion channel, is phosphorylated by a protein tyrosine kinase in post-synaptic membranes in vitro and in vivo. We demonstrate here that this tyrosine phosphorylation increases the rate of the rapid phase of desensitization of the nicotinic receptor, as measured by single channel recording of purified nicotinic acetylcholine receptor, when reconstituted in lipid vesicles. These data provide direct evidence for the regulation of ion channel properties by tyrosine phosphorylation. The results, which demonstrate a functional role of tyrosine phosphorylation in the nervous system, suggest a widespread role for tyrosine phosphorylation in neuronal signal transduction.