The activated platelet-derived growth factor (PDGF) receptor physically associates with p85, a subunit of phosphatidylinositol-3 kinase. Although this interaction may activate phosphatidylinositol-kinase and is crucial for PDGF-induced mitogenesis, it has not been shown whether p85 is modified in the process. p85 contains two SH2 (Src homology) domains, designated SH2-N and SH2-C. Recent experiments have shown that the SH2-C domain alone determines high-affinity binding of p85 to the PDGF receptor. The function of SH2-N, which binds receptors with lower affinity, is unknown. In this study, using a receptor-blotting technique, we find that p85 is modified by PDGF stimulation of intact cells. This modification involves inhibition of binding of the SH2-N region of p85 to the PDGF receptor. Studies with vanadate suggest that tyrosine phosphorylation of p85 is responsible for the modification of p85 detected by receptor blotting. Furthermore, recombinant p85 is modified in a similar manner when it is tyrosine phosphorylated in vitro by PDGF receptors. Tyrosine phosphorylation of p85 does not block binding of the SH2-C domain and therefore does not release p85 from high-affinity binding sites on the receptor in vitro. Instead, phosphorylation may regulate the ability of the SH2-N of p85 to bind to a different portion of the PDGF receptor or to another molecule in the signaling complex. This study provides the first evidence that p85 is tyrosine phosphorylated upon PDGF stimulation of cells and suggests that tyrosine phosphorylation of p85 regulates its activity or its interaction with other proteins.