The first exon of the BCR gene encodes a new serine/threonine protein kinase. Abnormal fusion of the BCR and ABL genes, resulting from the formation of the Philadelphia chromosome (Ph), is the hallmark of Ph-positive leukemia. We have previously demonstrated that the Bcr protein is tyrosine phosphorylated within first-exon sequences by the Bcr-Abl oncoprotein. Here we report that in addition to tyrose 177 (Y-177), Y-360 and Y283 are phosphorylated in Bcr-Abl proteins in vitro. Moreover, Bcr tyrosine 360 is phosphorylated in vivo within both Bcr-Abl and Bcr. Bcr mutant Y177F had a greatly reduced ability to transphosphorylate casein and histone H1, whereas Bcr mutants Y177F and Y283F had wild-type activities. In contrast, the Y360F mutation had little effect on Bcr's autophosphorylation activity. Tyrosine-phosphorylated Bcr, phosphorylated in vitro by Bcr-Abl, was greatly inhibited in its serine/threonine kinase activity, impairing both auto- and transkinase activities of Bcr. Similarly, the isolation of Bcr from cells expressing Bcr-Abl under conditions that preserve phosphotyrosine residues also reduced Bcr's kinase activity. These results indicate that tyrosine 360 of Bcr is critical for the transphosphorylation activity of Bcr and that in Ph-positive leukemia, Bcr serine/threonine kinase activity is seriously impaired.