Cortactin, a multi-domain scaffolding protein involved in actin polymerization, is enriched in podosomes induced by phorbol ester in vascular smooth muscle cells. We generated several functional and truncation mutants of cortactin to probe the roles of various protein interaction domains in the regulation of the dynamics of podosome formation. At the onset of podosome genesis, cortactin clustered near the ends of stress fibers that appeared to act as nucleation platforms onto which the actin polymerization machinery assembled. Translocation of cortactin to these pre-podosome clusters required the intact N-WASp-binding SH3 domain. Overexpression of the C-terminal third of cortactin containing the intact SH3 domain inhibited podosome formation presumably by sequestering of N-WASp and prevented cortactin clustering. Subsequent assembly of the actin-rich core of podosomes required translocation of additional cortactin to the actin core, a process that required the actin-binding repeats, but not the Arp2/3-binding N-terminal acidic region nor the SH3 domain. These results suggest that the SH3 domain and the actin-binding repeat region are involved, respectively, in the early and late stages of podosome formation process.