Following binding of platelet-derived growth factor (PDGF), the PDGF ␣ receptor (␣PDGFR) becomes tyrosine phosphorylated and associates with a number of signal transduction molecules, including phospholipase C␥-1 (PLC␥-1), phosphatidylinositol 3-kinase (PI3K), the phosphotyrosine phosphatase SHP-2, Grb2, and Src. Here, we present data identifying a novel phosphorylation site in the kinase insert domain of the ␣PDGFR at tyrosine (Y) 720. We replaced this residue with phenylalanine and expressed the mutated receptor (F720) in Patch fibroblasts that do not express the ␣PDGFR. Characterization of the F720 mutant indicated that binding of two proteins, SHP-2 and Grb2, was severely impaired, whereas PLC␥-1 and PI3K associated to wild-type levels. In addition, mutating Y720 to phenylalanine dramatically reduced PDGF-dependent tyrosine phosphorylation of SHP-2. Since Y720 was required for recruitment of two proteins, we investigated the mechanism by which these two proteins associated with the ␣PDGFR. SHP-2 bound the ␣PDGFR directly, whereas Grb2 associated indirectly, most probably via SHP-2, as Grb2 and SHP-2 coimmunoprecipitated when SHP-2 was tyrosine phosphorylated. We also compared the ability of the wild-type and F720 ␣PDGFRs to mediate a number of downstream events. Preventing the ␣PDGFR from recruiting SHP-2 and Grb2 did not compromise PDGF-AA-induced activation of Ras, initiation of DNA synthesis, or growth of cells in soft agar. We conclude that phosphorylation of the ␣PDGFR at Y720 is required for association of SHP-2 and Grb2 and tyrosine phosphorylation of SHP-2; however, these events are not required for the ␣PDGFR to activate Ras or initiate a proliferative response. In addition, these findings reveal that while SHP-2 binds to both of the receptors, it binds in different locations: to the carboxy terminus of the PDGFR but to the kinase insert of the ␣PDGFR.