The proto-oncogene product Cbl has emerged as a potential negative regulator of the Syk tyrosine kinase; however, the nature of physical interactions between Cbl and Syk that are critical for this negative regulation remains unclear. Here we show that the phosphotyrosine-binding (PTB) domain within the N-terminal transforming region of Cbl (Cbl-N) binds to phosphorylated Tyr323 in the linker region between the Src homology 2 and kinase domains of Syk, confirming recent results by another laboratory using the yeast two-hybrid approach (Deckert, M., Elly, C., Altman, A., and Liu, Y. C. (1998) J. Biol. Chem. 273, 8867-8874). A PTB domain-inactivating point mutation (G306E), corresponding to a loss-of-function mutation in the Caenorhabditis elegans Cbl homologue SLI-1, severely compromised Cbl-N/Syk binding in vitro and Cbl/Syk association in transfected COS-7 cells. Using heterologous expression in COS-7 cells, we investigated the role of Cbl PTB domain binding to Syk Tyr323 in the negative regulation of Syk. Co- expression of Cbl with Syk in COS-7 cells led to a dose-dependent decrease in the autophosphorylated pool of Syk and in phosphorylation of an in vivo substrate, CD8-ζ. Unexpectedly, these effects were largely due to the loss of Syk protein. Both the decrease in Syk and CD8-ζ phosphorylation and reduction in Syk protein levels were blocked by either G306E mutation in Cbl or by Y323F mutation in Syk. These results demonstrate a critical role for the Cbl PTB domain in the recruitment of Cbl to Syk and in Cbl-mediated negative regulation of Syk.