DDR2 is a receptor tyrosine kinase whose activating ligands are various collagens. DDR2-mediated cellular signaling has been shown to require Src activity. However, the precise mechanism underlying the Src dependence of DDR2 signaling is unknown. Here, using baculoviral co-expression of the DDR2 cytosolic domain and Src, we show that Src targets three tyrosine residues (Tyr-736, Tyr-740, and Tyr-741) in the activation loop of DDR2 for phosphorylation. This phosphorylation by Src stimulates DDR2 cisautophosphorylation of additional tyrosine residues. In vitro Shc binding assays demonstrate that phosphotyrosines resulting from DDR2 autophosphorylation are involved in Shc binding to the DDR2 cytosolic domain. Mutating tyrosine 740 of DDR2 to phenylalanine stimulates autophosphorylation of DDR2 to an extent similar to that resulting from Src phosphorylation of DDR2. In addition, the DDR2 Y740F mutant protein displays collagenindependent, constitutively activated signaling. These findings suggest that tyrosine 740 inhibits DDR2 autophosphorylation. Collectively, our findings are consistent with the following mechanism for Src-dependent DDR2 activation and signaling: 1) ligand binding promotes phosphorylation of Tyr-740 in the DDR2 activation loop by Src; 2) Tyr-740 phosphorylation stimulates intramolecular autophosphorylation of DDR2; 3) DDR2 autophosphorylation generates cytosolic domain phosphotyrosines that promote the formation of DDR2 cytosolic domain-Shc signaling complexes. The discoidin domain receptor (DDR)2 family, including DDR1 and DDR2, belongs to receptor tyrosine kinases (RTKs) family. Its extracellular part, containing the so-called discoidin domain, binds to various collagen proteins as their activating ligands (1-3), and its intracellular part possesses a domain of tyrosine kinase, which shares ϳ50% sequence homology with that of the Trk family of neurotrophin receptors as well as with insulin receptor (4 -6).Involvement of DDR proteins in the proliferation of various cell types has been reported. Increased DDR1 expression is observed in keratinocytes of the skin and smooth muscle cells around blood vessels when the tissues are injured (7,8). DDR1 is also expressed in monocyte-derived cells where it is believed to play a role in collagen binding and cell differentiation (9, 10). DDR2 expression is observed in mesenchymal cells and is involved in bone growth (11). During liver fibrosis, induction and activation of DDR2 occur in liver stellate cells, and its tyrosine kinase activity is necessary for the proliferation of stellate cells and for the increase of collagen and MMP-2 synthesis (12, 13). In rheumatoid arthritis, DDR2 induction is also observed in activated synovial fibroblasts and is thought to stimulate the growth of these cells and MMP-1 synthesis (14). In addition, the induction of DDR proteins is implicated in breast and ovarian cancer, and is correlated with metastasis (15, 16).Autophosphorylation of the cytosolic domain of RTKs is typically a critical event for the activation of RTK-med...