Elevated levels of Src kinase activity have been reported in a number of human cancers, including colon and breast cancer. We have analysed four human breast tumor cell lines that exhibit high levels of Src kinase activity, and have determined that these cell lines also exhibit a high level of a phosphotyrosine phosphatase activity that recognizes the Src carboxy-terminal P-Tyr530 negative regulatory site. Total Src kinase activity in these cell lines is elevated as much as 30-fold over activity in normal control cells and specific activity is elevated as much as 5.6-fold. When the breast tumor cells were grown in the presence of the tyrosine phosphatase inhibitor vanadate, Src kinase activity was reduced in all four breast tumor cell lines, suggesting that Src was being activated by a phosphatase which could recognize the Tyr530 negative regulatory site. In fractionated cell extracts from the breast tumor cells, we found elevated levels of a membrane associated tyrosine phosphatase activity that preferentially dephosphorylated a Src family carboxy-terminal phosphopeptide containing the regulatory tyrosine 530 site. Src was hypophosphorylated in vivo at tyrosine 530 in at least two of the tumor cell lines, further suggesting that Src was being activated by a phosphatase in these cells. In preliminary immunoprecipitation and antibody depletion experiments, we were unable to correlate the major portion of this phosphatase activity with several known phosphatases.