Cbl-b is implicated in setting the threshold of T lymphocyte activation. In Cbl-b-deficient T cells, the activation of Vav, a guanine nucleotide exchange factor, is significantly enhanced. The molecular mechanism underlying Cbl-b-regulated Vav activation was unclear. Here it is shown that Cbl-b interacts with and induces ubiquitin conjugation to the p85 regulatory subunit of phosphatidylinositol 3-kinase, an upstream regulator of Vav. A functional RING finger of Cbl-b was essential for p85 ubiquitination. However, a loss of function mutation at the well-conserved amino-terminal variant src homology (SH) 2 domain of Cbl-b did not affect its ligase activity. A distal carboxyl-terminal proline-rich region in Cbl-b was mapped to contain the primary binding sequences for the SH3 domain of p85. Deletion of either the distal proline-rich region in Cbl-b or the SH3 domain of p85 severely reduced ubiquitin conjugation to p85. The data suggest a molecular link for Cbl-b-mediated negative regulation of Vav, with phosphatidylinositol 3-kinase as a direct target for Cbl-b E3 ubiquitin ligase.