Host range mutants of Schmidt-Ruppin v-src that transform chicken embryo fibroblasts (CEF) but not Rat-2 cells were generated previously by linker insertion-deletion mutagenesis (J. E. DeClue and G. S. Martin, J. Virol. 63:542-554, 1989). One of these mutants, SRX5, in which Tyr-416 is substituted by the sequence Ser Arg Asp, retained high levels of kinase activity in vitro and in vivo, both in CEF and in Rat-2 cells. Phosphorylation of p36 (the calpactin I heavy chain) was drastically reduced in cells expressing SRX5 src, suggesting that the phenotype of SRX5 results from an alteration in substrate recognition by the src kinase. Three mutants, SPX1, SHX13, and XD6, containing linker insertions or small deletions within the src homology 2 (SH2) region, induced reduced levels of kinase activity in both CEF and Rat-2 cells. However, the residual levels of kinase activity in Rat-2 cells were above the threshold at which wild-type pp60v-src transforms Rat-2 cells, indicating that the reduction in kinase activity was not sufficient to account for the failure to transform. Cells infected by these mutants exhibited reduced levels of phosphorylation of 120- and 62-kDa proteins. We have reported elsewhere (M. F. Moran, C. A. Koch, D. Anderson, C. Ellis, L. England, G. S. Martin, and T. Pawson, Proc. Natl. Acad. Sci. USA 87:8622-8626, 1990) that ras GTPase-activating protein GAP and associated protein p62 are not tyrosine phosphorylated in Rat-2 cells expressing SHX13 or XD6. The transformation defect in Rat-2 cells may result from the failure to phosphorylate those proteins. The fifth mutant, XD4, contains a deletion which removes all of the src homology 3 (SH3) and most of the SH2 sequences of src. The protein encoded by XD4 is active as a kinase when expressed in CEF, indicating that in CEF the SH2 and SH3 regions of v-src are not necessary for kinase activity and transformation. The XD4 src product is not tyrosine phosphorylated and is inactive as a kinase when expressed in Rat-2 cells. Thus, host cell factors can affect the tyrosine phosphorylation and activity of the v-src kinase in the absence of the SH2 and SH3 regions. These results indicate that the host-dependent transformation phenotype results from alterations in src kinase activity and substrate specificity.