The transforming protein of Rous sarcoma virus (pp60v-src) and its normal cellular homolog (pp60c-src) are demonstrated to be phosphorylated at serine 12 in vivo under certain conditions. We propose that protein kinase C is responsible for this modification based on the following evidence. First, the tumor promoters, 12-O-tetradecanoylphorbol-13-acetate and teleocidin, and synthetic diacylglycerol, known activators of protein kinase C in vivo, cause nearly complete phosphorylation of pp60src at serine 12. Second, among five purified serine/threonine-specific protein kinases tested, only protein kinase C phosphorylates pp60c-src and pp60v-src in vitro at serine 12. Third, purified protein kinase C phosphorylates a synthetic peptide corresponding to the N-terminal 20 amino acids of pp60c-src at serine 12. The physiological significance of this novel phosphorylation is discussed.