In T cells, cAMP-dependent protein kinase (PKA) type I colocalizes with the T cell receptor-CD3 complex (TCR/CD3) and inhibits T cell function via a previously unknown proximal target. Here we examine the mechanism for this PKA-mediated immunomodulation. cAMP treatment of Jurkat and normal T cells reduces Lck-mediated tyrosine phosphorylation of the TCR/CD3 zeta chain after T cell activation, and decreases Lck activity. Phosphorylation of residue Y505 in Lck by COOH-terminal Src kinase (Csk), which negatively regulates Lck, is essential for the inhibitory effect of cAMP on zeta chain phosphorylation. PKA phosphorylates Csk at S364 in vitro and in vivo leading to a two- to fourfold increase in Csk activity that is necessary for cAMP-mediated inhibition of TCR-induced interleukin 2 secretion. Both PKA type I and Csk are targeted to lipid rafts where proximal T cell activation occurs, and phosphorylation of raft-associated Lck by Csk is increased in cells treated with forskolin. We propose a mechanism whereby PKA through activation of Csk intersects signaling by Src kinases and inhibits T cell activation.