BACKGROUND Src kinase plays a critical role in bone metabolism, particularly in osteoclasts. However, the ability of Src kinase to modulate the activity of other bone cells is less well understood. In this work, we examined the expression and activity of Src and low molecular weight protein tyrosine phosphatase (LMWPTP) during osteoblast differentiation and assessed the modulation of Src kinase by LMWPTP. METHODS Differentiation of MC3T3-E1 pre-osteoblasts was induced by incubation with ascorbic acid and beta-glycerophosphate for up to 28 days. Src phosphorylation and LMWPTP expression were analyzed by immunoblotting. Src dephosphorylation in vitro was assessed by incubating immunoprecipitated Src with LMWPTP followed by assay of the residual Src activity using Sam68 as substrate. The importance of LMWPTP in Src dephosphorylation was confirmed by silencing pre-osteoblasts with siRNA-LMWPTP and then assessing Src phosphorylation. RESULTS Pre-osteoblast differentiation was accompanied by a decrease in phosphorylation of the activator site of Src and an increase in phosphorylation of the inhibitory site. The expression of total Src was unaltered, indicating that post-translational modifications play a pivotal role in Src function. LMWPTP expression was higher in periods when the activator site of Src was dephosphorylated. LMWPTP dephosphorylated pY(527)-Src and pY(416)-Src in vitro, with greater specificity for pY(527)Src. Activation of LMWPTP produced strong activation of Src mediated by fast dephosphorylation of pY(527)-Src, followed by slower deactivation of this kinase via dephosphorylation of pY(416)Src. CONCLUSIONS These results provide new insight into the mechanisms governing the dynamics of Src activity during osteoblast differentiation. A fuller understanding of these mechanisms will improve our knowledge of bone metabolism and of the regulation of Src in other types of cells.