The recently identified transient receptor potential (TRP) channel family member, TRPV4 (formerly known as OTRPC4, VR-OAC, TRP12, and VRL-2) is activated by hypotonicity. It is highly expressed in the kidney as well as blood-brain barrier-deficient hypothalamic nuclei responsible for systemic osmosensing. Apart from its gating by hypotonicity, little is known about TRPV4 regulation. We observed that hypotonic stress resulted in rapid tyrosine phosphorylation of TRPV4 in a heterologous expression model and in native murine distal convoluted tubule cells in culture. This tyrosine phosphorylation was sensitive to the inhibitor of Src family tyrosine kinases, PP1, in a dose-dependent fashion. TRPV4 associated with Src family kinases by co-immunoprecipitation studies and confocal immunofluorescence microscopy, and this interaction required an intact Src family kinase SH2 domain. One of these kinases, Lyn, was activated by hypotonic stress and phosphorylated TRPV4 in an immune complex kinase assay and an in vitro kinase assay using recombinant Lyn and TRPV4. Transfection of wild-type Lyn dramatically potentiated hypotonicity-dependent TRPV4 tyrosine phosphorylation whereas dominant negative-acting Lyn modestly inhibited it. Through mutagenesis studies, the site of tonicity-dependent tyrosine phosphorylation was mapped to Tyr-253, which is conserved across all species from which TRPV4 has been cloned. Importantly, point mutation of Tyr-253 abolished hypotonicity-dependent channel activity. In aggregate, these data indicate that hypotonic stress results in Src family tyrosine kinase-dependent tyrosine phosphorylation of the tonicity sensor TRPV4 at residue Tyr-253 and that this residue is essential for channel function in this context. This is the first example of direct regulation of TRP channel function through tyrosine phosphorylation.