The nonreceptor tyrosine kinase, c-src, and the steroid hormone,1,25-dihydroxyvitamin D3(1,25(OH)2D3), are essential to development of the osteoclast phenotype. On the other hand, functional relationships between the activities of c-src and 1,25(OH)2D3 are as yet unknown. To determine if 1,25(OH)2D3 modulates c-src in osteoclastogenesis, we tested the steroid's effect on avian marrow-derived osteoclast precursors. We find c-src mRNA and immunoprecipitable c-src protein (pp60c-src) unaltered by 72 h exposure of these cells to 1,25(OH)2D3 (10(-11) to 10(-9) M). Despite no quantitative change in pp60c-src, in vitro kinase assay of the immune complex reveals 1,25(OH)2D3 dose-dependently accelerates the catalytic activity of pp60c-src, enhancing its autophosphorylation and phosphorylation of exogenous substrate. This observation represents the first documentation, in nontransformed cells, of humoral induction of pp60c-src kinase. Consistent with the fact pp60c-src is activated by dephosphorylation of tyrosine 527 (Y527), the phosphotyrosine content of the pp60c-src immunoprecipitate, measured by immunoblot, is decreased by 1,25(OH)2D3. Alternatively, mRNA and protein levels of c-src kinase (CSK), which inactivates pp60c-src by phosphorylating Y527, are not altered by the steroid. In contrast, 1,25(OH)2D3 enhances mRNA and especially protein levels of avian protein tyrosine phosphatase lambda (PTP lambda), an enzyme specifically activating pp60c-src by dephosphorylating Y527 [Fang et al. (1994): J Biol Chem 269:20194-20200]. Thus, treatment of avian osteoclast precursors with 1,25(OH)2D3 accelerates the catalytic activity of pp60c-src independent of protein expression. Activation of the kinase may occur via the Y527 dephosphorylating enzyme PTP, expression of which, we show for the first time, is regulated.