Alix/AIP1 is an adaptor protein involved in regulating the function of receptor and cytoskeleton-associated tyrosine kinases. Here, we investigated its interaction with and regulation by Src. Tyr319 of Alix bound the isolated Src homology-2 (SH2) domain and was necessary for interaction with intact Src. A proline-rich region in the C terminus of Alix bound the Src SH3 domain, but this interaction was dependent on the release of the Src SH2 domain from its Src internal ligand either by interaction with Alix Tyr319 or by mutation of Src Tyr527. Src phosphorylated Alix at a C-terminal region rich in tyrosines, an activity that was stimulated by the presence of the Alix binding partner SETA/CIN85. Phosphorylation of Alix by Src caused it to translocate from the membrane and cytoskeleton to the cytoplasm and reduced its interaction with binding partners SETA/CIN85, epidermal growth factor receptor, and Pyk2. As a consequence of this, Src antagonized the negative regulation of receptor tyrosine kinase internalization and cell adhesion by Alix. We propose a model whereby Src antagonizes the effects of Alix by phosphorylation of its C terminus, leading to the disruption of interactions with target proteins.