During or immediately after synthesis in vertebrate cells, the oncogenic protein-tyrosine kinase pp60v-src associates with the approximately 90-kDa heat-shock protein (hsp90). In this complex, pp60v-src is not functional as a kinase. When pp60v-src is subsequently found inserted into the plasma membrane, it is active as a kinase and is no longer associated with hsp90. We have taken advantage of genetic manipulations possible in Saccharomyces cerevisiae to investigate the function and specificity of the association between hsp90 and pp60v-src. Expression of pp60v-src is known to be toxic to S. cerevisiae cells. We find that this toxicity is due to a very specific effect on growth, arrest at a particular point in the cell cycle. In cells expressing v-src, a mutation that lowers the level of hsp90 expression (i) relieves cell cycle arrest and rescues growth, (ii) reduces the level of tyrosine phosphorylation mediated by pp60v-src, (iii) changes the pattern of tyrosine phosphorylation, and (iv) reduces the concentration of pp60v-src. We conclude that hsp90 does not simply suppress pp60v-src kinase activity during transit to the plasma membrane, as previously suggested, but also stabilizes the protein and affects both its activity and specificity. This function of hsp90 is highly selective for pp60v-src: the same hsp90 mutation has no effect on the activity or specificity of the exogenous pp160v-abl tyrosine kinase; similarly, it does not affect the specificity and has only a very small effect on the activity of the exogenous pp60c-src kinase.