Cortactin, a predominant substrate of Src family kinases, plays an important role in Arp2/3-dependent actin polymerization in lamellipodia and membrane ruffles and was recently shown to be enriched in podosomes induced by either c-Src or phorbol ester. However, the mechanisms by which cortactin regulates podosome formation have not been determined. In this study, we showed that cortactin is required for podosome formation, using siRNA knockdown of cortactin expression in smooth muscle A7r5 cells. Treatment with phorbol ester or expression of constitutively active c-Src induced genesis of cortactin-containing podosomes as well as increase in phosphorylation of cortactin at Y421 and Y466, the Src phosphorylation sites on cortactin. The Src kinase inhibitor SU-6656 significantly inhibited formation of podosomes induced by phorbol ester and phosphorylation of cortactin, whereas PKCalpha inhibitor did not affect podosome formation in c-Src-transfected cells. Unexpectedly, expression of cortactin mutants containing Y421F, Y421D, Y466F, or Y466D mutated sites did not affect podosome formation or cortactin translocation to podosomes, although endogenous tyrosine-phosphorylated cortactin at Y421 and Y466 was present in podosomes. Our data indicate that 1) PKCalpha acts upstream of Src in phosphorylation of cortactin and podosome formation in smooth muscle cells; 2) expression of cortactin is essential for genesis of podosomes; 3) phosphorylation at Y421 and Y466 is not required for translocation of cortactin to podosomes, although phosphorylation at these sites appears to be enriched in podosomes; and 4) tyrosine phosphorylation of cortactin may be involved in regulation of stability and turnover of podosomes, rather than targeting this protein to the site of podosome formation.