We have used the yeast two-hybrid system to identify proteins that interact with Vav, a GDP/GTP exchange factor for the Rac-1 GTPase that plays an important role in cell signaling and oncogenic transformation. This experimental approach resulted in the isolation of Cbl-b, a signal transduction molecule highly related to the mammalian c-cbl proto-oncogene product and to the C. elegans Sli-1 protein, a negative regulator of the EGF-receptor-like Let23 protein. The interaction between Vav and Cbl-b requires the entire SH3-SH2-SH3 carboxy-terminal domain of Vav and a long stretch of proline-rich sequences present in the central region of Cbl-b. Stimulation of quiescent rodent fibroblasts with either epidermal or platelet-derived growth factors induces an increased affinity of Vav for Cbl-b and results in the subsequent formation of a Vav-dependent trimeric complex with the ligand-stimulated tyrosine kinase receptors. During this process, Vav, but not Cbl-b, becomes highly phosphorylated on tyrosine residues. Overexpression of Cbl-b inhibits the signal transduction pathway of Vav that leads to the stimulation of c-Jun N-terminal kinase. By contrast, expression of truncated Cbl-b proteins and of missense mutants analogous to those found in inactive Sli-1 proteins have no detectable effect on Vav activity. These results indicate that Vav and Cbl-b act coordinately in the first steps of tyrosine protein kinase receptor-mediated signaling and suggest that members of the Sli-1/Cbl family are also negative regulators of signal transduction in mammalian cells.