Members of the nonreceptor tyrosine kinase family appear to be targeted to caveolae membrane. We have used a Rat-1 cell expressing a temperature sensitive pp60(v-src) kinase to assess the initial changes that take place in caveolae after kinase activation. Within 24-48 h after cells were shifted to the permissive temperature, a set of caveolae-specific proteins became phosphorylated on tyrosine. During this period there was a decline in the caveolae marker protein, caveolin-1, a loss of invaginated caveolae, and a 70% decline in the sphingomyelin content of the cell. One of the phosphorylated proteins was caveolin-1 but it was associated in coimmunoprecipitation assays with both a 30 kDa and a 27 kDa tyrosine-phosphorylated protein. Finally, the cells changed from having a typical fibroblast morphology to a rounded shape lacking polarity. In light of the recent evidence that diverse signaling events originate from caveolae, pp60(v-src) kinase appears to cause global changes to this membrane domain that might directly contribute to the transformed phenotype.