The membrane-anchored c-Src tyrosine kinase mediates signaling from a wide range of cell surface receptors controlling cell growth, adhesion, and survival. c-Src deregulation is associated with cancer. Dimerization appears to be a novel layer of regulation through a yet unclear mechanism. Binding of c-Src tyrosine kinase to the plasma membrane is mediated by the myristoylated and strongly positively charged N-terminal SH4 domain. Although activation of c-Src is known to require phosphorylation by a second c-Src molecule, electrostatic repulsion between the charged residues was considered to prevent dimerization. Here we show that a cluster of positively charged lysine residues in c-Src SH4 domain not only does not prevent dimerization but, in fact, enhances it through a lipid-mediated process. Dimerization not only depends on the number of positive charges but also on their position and the nature of the charged residues. Replacement of lysine by arginine increases dimerization in vitro and in vivo and, in HEK293T cells, causes a two-fold increase in tyrosine phosphorylation. Lipid mediated protein-protein interactions induced by clusters of basic residues may represent a general mechanism for modulating cell signaling, consistent with the abundance of positively charged residues in the juxta membrane region of many signaling proteins.