Upon stimulation of cells with platelet-derived growth factor (PDGF), phospholipase C-␥1 (PLC-␥1) binds to the tyrosine-phosphorylated PDGF receptor through one or both of its Src homology 2 (SH2) domains, is phosphorylated by the receptor kinase, and is thereby activated to hydrolyze phosphatidylinositol 4,5-bisphosphate. Association of PLC-␥1 with the insoluble subcellular fraction is also enhanced in PDGF-stimulated cells. The individual roles of the two SH2 domains of PLC-␥1 in mediating the interaction between the enzyme and the PDGF receptor have now been investigated by functionally disabling each domain. A critical Arg residue in each SH2 domain was mutated to Ala. Both wild-type and mutant PLC-␥1 proteins were transiently expressed in a PLC-␥1-deficient fibroblast cell line, and these transfected cells were stimulated with PDGF. The mutant protein in which the COOH-terminal SH2 domain was disabled bound to the PDGF receptor. Accordingly, it was phosphorylated by the receptor, catalyzed the production of inositol phosphates, and mobilized intracellular calcium to extents similar to (but slightly less than) those observed with the wild-type enzyme. In contrast, the mutant in which the NH 2 -terminal SH2 domain was impaired did not bind to the PDGF receptor and consequently was neither phosphorylated nor activated. These results suggest that the NH 2 -terminal SH2 domain, but not the COOH-terminal SH2 domain, of PLC-␥1 is required for PDGF-induced activation of PLC-␥1. Functional impairment of the SH2 domains did not affect the PDGF-induced redistribution of PLC-␥1, suggesting that recruitment of PLC-␥1 to the particulate fraction does not involve the SH2 domains.