Previously we have shown that protein kinase C (PKC)-mediated reorganization of the actin cytoskeleton in smooth muscle cells is transmitted by the nonreceptor tyrosine kinase, Src. Several authors have described how 12-O-tetradecanoylphorbol-13-acetate (TPA) stimulation of cells results in an increase of Src activity, but the mechanism of the PKC-mediated Src activation is unknown. Using PKC isozymes purified from Spodoptera frugiperda insect cells, we show here that PKC is not able to activate Src directly. Our data reveal that the PKC-dependent Src activation occurs via the activation of the protein tyrosine phosphatase (PTP) PTP␣. PTP␣ becomes activated in vivo after TPA stimulation. Further, we show that PKC␦ phosphorylates and activates only PTP␣ in vitro but not any other of the TPA-responsive PKC isozymes that are expressed in A7r5 rat aortic smooth muscle cells. To further substantiate our data, we show that cells lacking PKC␦ have a markedly reduced PTP␣ and Src activity after 12-O-tetradecanoylphorbol-13-acetate stimulation. These data support a model in which the main mechanism of 12-O-tetradecanoylphorbol-13-acetate-induced Src activation is the direct phosphorylation and activation of PTP␣ by PKC␦, which in turn dephosphorylates and activates Src.Protein kinase C (PKC) 1 is a family of phospholipid-dependent serine/threonine kinases comprising 10 isozymes differing in their molecular domain organization of up to 4 variable and 3 constant regions and in their functions. These PKC isozymes are subdivided into three classes: (i)the "conventional" cPKCs, PKC-␣, - (I and II), and -␥, which can be activated by phosphatidylserine (PS), diacyl glycerol (DAG), or phorbol esters through binding to the C1 domain and Ca 2ϩ through binding to a Ca 2ϩ -binding site in their second constant region, C2; (ii) the "novel" nPKCs, PKC-␦, -⑀, -, -, which lack the C2 region and thus are Ca-independent but still DAG-, PS-, and phorbol ester-responsive; and (iii) the "atypical" aPKCs, PKC-/ and -, which also lack the C2 region and, in addition, are devoid of a functional DAG-binding site. Hence, the atypical PKCs are only responsive to PS but not to DAG or phorbol ester (reviewed in Refs.