Integrin-mediated focal adhesions connect the extracellular matrix and cytoskeleton to regulate cell responses, such as migration. Protein tyrosine phosphatase ␣ (PTP␣) regulates integrin signaling, focal adhesion formation, and migration, but its roles in these events are incompletely understood. The integrin-proximal action of PTP␣ activates Src family kinases, and subsequent phosphorylation of PTP␣ at Tyr789 acts in an unknown manner to promote migration. PTP␣-null cells were used in reconstitution assays to distinguish PTP␣-Tyr789-dependent signaling events. This showed that PTP␣-Tyr789 regulates the localization of PTP␣ and the scaffolding protein Cas to adhesion sites where Cas interacts with and is phosphorylated by Src to initiate Cas signaling. Linking these events, we identify BCAR3 as a molecular connector of PTP␣ and Cas, with phospho-Tyr789 PTP␣ serving as the first defined cellular ligand for the BCAR3 SH2 domain that recruits BCAR3-Cas to adhesions. Our findings reveal a novel role of PTP␣ in integrin-induced adhesion assembly that enables Src-mediated activation of the pivotal function of Cas in migration.