The protooncogene product Cbl has emerged as a negative regulator of tyrosine kinases. We have shown previously that Cbl binds to ZAP-70 through its N-terminal tyrosine kinase binding (TKB) domain. In this study, we demonstrate that overexpression of Cbl in Jurkat T cells decreases the TCR-induced phosphorylation of ZAP-70 and other cellular phosphoproteins. Coexpression of Cbl with ZAP-70 in COS cells reproduced the Cbl-induced reduction in the level of phosphorylated ZAP-70. The effect of Cbl was eliminated by the TKB-inactivating G306E mutation in Cbl as well as by a phenylalanine mutation of Tyr292 within the TKB domain binding site on ZAP-70. Notably, the oncogenic Cbl-70Z/3 mutant associated with ZAP-70, but did not reduce the levels of phosphorylated ZAP-70. Overexpression of Cbl, but not Cbl-G306E, in Jurkat T cells led to a decrease in the TCR-induced NF-AT luciferase reporter activity. Overexpression of the TKB domain itself, but not its G306E mutant, functioned in a dominant-negative manner and led to an increase in NF-AT reporter activity. Cbl-70Z/3-overexpressing cells exhibited an increase in both basal and TCR-induced NF-AT luciferase reporter activity, and this trend was reversed by the G306E mutation. Finally, by reconstituting a ZAP-70-deficient Jurkat T cell line, p116, we demonstrate that wild-type ZAP-70 is susceptible to the negative regulatory effect of Cbl, whereas the ZAP-70-Y292F mutant is resistant. Together, our results establish that the linker phosphorylation site Tyr292 mediates the negative regulatory effect of Cbl on ZAP-70 in T cells.