The protein kinase activity associated with pp60^src, the transforming protein of Rous sarcoma virus, was found to phosphorylate tyrosine when assayed in an immunoprecipitate. Despite the fact that a protein kinase with this activity has not been described before, several observations suggest that pp60^src also phosphorylates tyrosine in vivo. First, chicken cells transformed by Rous sarcoma virus contain as much as 8-fold more phosphotyrosine than do uninfected cells. Second, phosphotyrosine is present in pp60^src itself, at one of the two sites of phosphorylation. Third, phosphotyrosine is present in the 50,000-dalton phosphoprotein that coprecipitates with pp60^src extracted from transformed chicken cells. We infer from these observations that pp60^src is a novel protein kinase and that the modification of proteins via the phosphorylation of tyrosine is essential to the malignant transformation of cells by Rous sarcoma virus. pp60^sarc, the closely related cellular homologue of viral pp60^src, is present in all vertebrate cells. This normal cellular protein, obtained from both chicken and human cells, also phosphorylated tyrosine when assayed in an immunoprecipitate. This is additional evidence of the functional similarity of these structurally related proteins and demonstrates that all uninfected vertebrate cells contain at least one protein kinase that phosphorylates tyrosine.