Wrch-1 is an atypical Rho family small GTPase with roles in migration, epithelial cell morphogenesis, osteoclastogenesis, and oncogenic transformation. Here, we observed rapid relocalization of Wrch-1 from the plasma membrane upon serum stimulation. Studies revealed a requirement for serum-stimulated tyrosine phosphorylation of Wrch-1 at residue Y254 within its C-terminal membrane targeting domain, mediated by the nonreceptor tyrosine kinase Src. Genetic or pharmacological loss of Src kinase activity blocked both phosphorylation and relocalization of Wrch-1. Functionally, Y254 was required for proper Wrch-1 modulation of cystogenesis in three-dimensional culture, and the phospho-deficient mutant, Y254F, was enhanced in Wrch-1-mediated anchorage-independent growth. Mechanistically, C-terminal tyrosine phosphorylation and subsequent relocalization of Wrch-1 downregulated its ability to interact with and activate its effectors by decreasing active Wrch-1-GTP, perhaps by altering proximity to a GEF or GAP. Phospho-deficient Wrch-1(Y254F) remained at the plasma membrane and GTP bound and continued to recruit and activate its effector PAK, even upon serum stimulation. In contrast, a phospho-mimetic mutant, Y254E, was constitutively endosomally localized and GDP bound and failed to recruit PAK unless mutated to be constitutively active/GAP insensitive. C-terminal tyrosine phosphorylation thus represents a new paradigm in posttranslational control of small GTPase localization, activation, and biological function.