Brassinosteroids (BRs) regulate plant development through a signal transduction pathway involving the BRI1 and BAK1 transmembrane receptor kinases. The detailed molecular mechanisms of phosphorylation, kinase activation, and oligomerization of the BRI1/BAK1 complex in response to BRs are uncertain. We demonstrate that BR-dependent activation of BRI1 precedes association with BAK1 in planta, and that BRI1 positively regulates BAK1 phosphorylation levels in vivo. BRI1 transphosphorylates BAK1 in vitro on specific kinase-domain residues critical for BAK1 function. BAK1 also transphosphorylates BRI1, thereby quantitatively increasing BRI1 kinase activity toward a specific substrate. We propose a sequential transphosphorylation model in which BRI1 controls signaling specificity by direct BR binding followed by substrate phosphorylation. The coreceptor BAK1 is then activated by BRI1-dependent transphosphorylation and subsequently enhances signaling output through reciprocal BRI1 transphosphorylation. This model suggests both conservation and distinct differences between the molecular mechanisms regulating phosphorylation-dependent kinase activation in plant and animal receptor kinases.