Oncogenic c-Kit mutations have been shown to display ligand-independent receptor activation and cell proliferation. A substitution of aspartate to valine at amino acid 816 (D816V) is one of the most commonly found oncogenic c-Kit mutations and is found in >90% of cases of mastocytosis and less commonly in germ-cell tumors, core-binding factor acute myeloid leukemia and mucosal melanomas. The mechanisms by which this mutation leads to constitutive activation and transformation are not fully understood. Previous studies have shown that the D816V mutation causes a structural change in the activation loop (A-loop), resulting in weaker binding of the A-loop to the juxtamembrane domain. In this paper, we have investigated the role of Y823, the only tyrosine residue in the A-loop, and its role in oncogenic transformation by c-Kit/D816V by introducing the Y823F mutation. Although dispensable for the kinase activity of c-Kit/D816V, the presence of Y823 was crucial for cell proliferation and survival. Furthermore, mutation of Y823 selectively downregulates the Ras/Erk and Akt pathways as well as the phosphorylation of STAT5 and reduces the transforming capacity of the D816V/c-Kit in vitro. We further show that mice injected with cells expressing c-Kit/D816V/Y823F display significantly reduced tumor size as well as tumor weight compared with controls. Finally, microarray analysis, comparing Y823F/D816V cells with cells expressing c-Kit/D816V, demonstrate that mutation of Y823 causes upregulation of proapoptotic genes, whereas genes of survival pathways are downregulated. Thus, phosphorylation of Y823 is not necessary for kinase activation, but essential for the transforming ability of the c-Kit/D816V mutant.