We have previously shown that the c-Src tyrosine kinase is activated four- to fivefold when cultured keratinocytes differentiate following the elevation of intracellular calcium levels. In contrast to c-Src, another Src family tyrosine kinase, c-Yes, was rapidly inactivated in these same cells, despite its marked similarity in structure and enzymatic activity to c-Src. The inactivation of c-Yes was independent of the protein kinase C pathway, which is usually activated by elevation of intracellular calcium levels. The protein levels of c-Src and c-Yes were not altered, but the phosphotyrosine content of both proteins was greatly reduced. As has been demonstrated for c-Src, in vitro dephosphorylation of c-Yes by incubation with protein tyrosine phosphatases also resulted in its activation, not inactivation. In vitro reconstitution experiments showed that c-Yes can be inactivated by preincubation with a Ca(2+)-supplemented cell extract and that this inhibition was reversed by the addition of EGTA [ethylene glycol-bis(beta-aminoethyl ether)-N,N,N',N'-tetraacetic acid]. Gradient sedimentation of cell lysates showed that in cells treated with calcium and ionophore, c-Yes formed complexes with two distinct cellular proteins, whereas similar complexes were not seen in c-Src immunoprecipitates. One of these two proteins has the ability to inhibit c-Yes kinase activity in vitro. Finally, the Ca(2+)-dependent inactivation of c-Yes was observed in kidney tubular cells and fibroblasts, suggesting that the Ca(2+)-dependent regulation of c-Yes tyrosine kinase is not unique to keratinocytes. We postulate that c-Yes is inactivated through a Ca2+ -dependent association with cellular proteins, which seems to override its activation resulting from tyrosine dephosphorylation.