The metastasis-associated tyrosine phosphatase PRL-3/PTP4A is upregulated in numerous cancers, but the mechanisms modulating PRL-3 activity other than its expression levels have not been investigated. Here we report evidence for both Src-dependent tyrosine phosphorylation of PRL-3 and Src-mediated regulation of PRL-3 biological activities. We used structural mutants, pharmacological inhibitors and siRNA to demonstrate Src-dependent phosphorylation of endogenous PRL-3 in SW480 colon cancer cells. We also demonstrated that PRL-3 was not tyrosine phosphorylated in SYF mouse embryo fibroblasts deficient in Src, Yes and Fyn unless Src was re-expressed. Further, we show that platelet-derived growth factor (PDGF) can stimulate PRL-3 phosphorylation in a Src-dependent manner. Finally, we show that PRL-3-induced cell motility, Matrigel invasion and activation of the cytoskeleton-regulating small GTPase RhoC were abrogated in the presence of the phosphodeficient PRL-3 mutant Y53F, or by use of a Src inhibitor. Thus, PRL-3 requires the activity of a Src kinase, likely Src itself, to promote these cancer-associated phenotypes. Our data establish a model for the regulation of PRL-3 by Src that supports the possibility of their coordinate roles in signaling pathways promoting invasion and metastasis, and supports simultaneous use of novel molecularly targeted therapeutics directed at these proteins.