Crkl is an adapter protein and phosphotyrosine-containing substrate implicated in transformation by the bcr-abl oncogene and in signaling by cytokines. When phosphorylated, Crkl binds through its Src homology 2 (SH2) domain to other tyrosine phosphoproteins such as paxillin and Cbl. Overexpression of Crkl in fibroblasts induces transformation. Here we examine the role of Crkl in hematopoietic cells and find that overexpression of Crkl confers a signal leading to increased adhesion to fibronectin. In both fibroblasts and hematopoietic cells, individual mutations or deletions of each SH2 and SH3 domain abrogated transformation and adhesion, respectively, indicating that interactions with other proteins such as Cbl and paxillin (SH2 domain) and Abl, Sos, and C3G (N-terminal SH3 domain) are essential for biological activity. In vivo and in vitro tryptic phosphopeptide mapping studies show that Crkl is phosphorylated on multiple tyrosine residues when overexpressed or when activated by Bcr-Abl. Mutation at tyrosine 207, a residue conserved in c-Crk, abrogates all in vivo tyrosine phosphorylation of Crkl. Despite this loss of phosphotyrosine, mutation at this site enhanced Crkl function as measured by complex formation with SH2 binding proteins, signal transduction to Jun Kinase, and fibroblast transformation. These observations implicate Crkl in cellular adhesion and demonstrate that Y207 functions as a negative regulatory site.