The tyrosine kinase c-Abl is implicated in a variety of cellular processes that are tightly regulated by c-Abl kinase activity and/or by interactions between c-Abl and other signaling molecules. The interaction of c-Abl with the Abl interactor protein Abi2 is shown to be negatively regulated by phosphorylation of serines 637 and 638. These serines are adjacent to the PxxP motif (PTPPKRS637S638SFR) that binds the SH3 domain of Abi. Phosphorylation of the Abl 593-730 fragment by Pak2 dramatically reduces Abi2 binding ( approximately 90%). Mutation of serines 637-639 to alanine (3A) or aspartate (3D) results in an increased tyrosine kinase activity of c-Abl 3D, and a slight reduction of the activity of the 3A mutant, as compared to wild-type (WT) c-Abl. The interaction between Abi2 and c-Abl 3D is inhibited by 80%, as compared to WT c-Abl or c-Abl 3A. This is accompanied by a 2-fold increase in binding of Crk to c-Abl 3D. The data indicate a molecular mechanism whereby phosphorylation of c-Abl by Pak2 inhibits the interaction between the SH3 domain of Abi2 and the PxxP motif of c-Abl. This phosphorylation enhances the association of c-Abl with the substrate Crk and increases c-Abl-mediated phosphorylation of Crk, thus altering the association of Crk with other signaling molecules.