Binding of alpha interferon (IFN␣) to its receptors induces rapid tyrosine phosphorylation of the receptor subunits IFNaR1 and IFNaR2, the TYK2 and JAK1 tyrosine kinases, and the Stat1 and Stat2 transcription factors. Previous studies have demonstrated that TYK2 directly and specifically binds to and tyrosine phosphorylates IFNaR1 in vitro. We now report a detailed analysis of the TYK2 binding domain on the IFNaR1 subunit. First, we used an in vitro binding assay to identify the TYK2 binding motif in IFNaR1 as well as the critical residues within this region. The most striking feature is the importance of a number of hydrophobic and acidic residues. A minor role is also ascribed to a region resembling the proline-rich ''box 1'' sequence. In addition, mutations which disrupt in vitro binding also disrupt the coimmunoprecipitation of the receptor and TYK2. We also provide direct evidence that the binding region is both necessary and sufficient to activate TYK2 in vivo. Specifically, mutations in the binding domain act in a dominant-negative fashion to inhibit the IFN␣-induced tyrosine phosphorylation of TYK2 and Stat2. Further, introduction of dimerized glutathione S-transferase-IFNaR1 fusion proteins into permeabilized cells is sufficient to induce phosphorylation of TYK2 and the receptor, confirming the role of the binding domain in IFN␣ signal transduction. These studies provide clues to the sequences determining the specificity of the association between JAK family tyrosine kinases and cytokine receptors as well as the functional role of these kinases in cytokine signal transduction.A number of polypeptide hormones initiate signal transduction by binding to their cognate receptors and stimulating intracellular protein tyrosine kinase activity (43). Although cytokine receptors do not possess intrinsic tyrosine kinase activity, rapid tyrosine phosphorylation occurs in response to cytokine treatment of cells (reviewed in references 10, 22, 40, and 46). In a number of cases, JAK family tyrosine kinases are found associated with cytokine receptors and become activated following ligand binding (3,8,54). The JAKs are a structurally distinct subfamily of nonreceptor tyrosine kinases composed of TYK2 (14), JAK1 (53), JAK2 (19), JAK3 (6,23,39,45,55), and the gene product of the Drosophila hopscotch locus (5). These kinases are proteins of 115 to 135 kDa that contain a bona fide carboxy-terminal kinase domain along with an adjacent kinase-like domain and lack both SH2 and SH3 domains. The kinase-like domain contains a number of the sequence motifs characteristic of protein kinases but lacks some of the conserved amino acids thought to be essential for protein kinase activity (18). The amino-terminal half of the JAK kinases contains five additional regions of homology and a relatively unique region present at the extreme amino terminus of the protein (19,55). Some of these amino-terminal domains are apparently involved in the association of the JAKs with members of the cytokine receptor superfamily (47, 58). However, ther...