Tyrosine kinases and phosphatases are abundant in the nervous system, where they signal cellular differentiation, mediate the responses to growth factors, and direct neurite outgrowth during development. Tyrosine phosphorylation can also alter ion channel activity, but its physiological significance remains unclear. In an identified leech mechanosensory neuron, the ubiquitous neuromodulator serotonin increases the activity of a cation channel by activating protein kinase C (PKC), resulting in membrane depolarization and modulation of the receptive field properties. We observed that the effects on isolated neurons and channels were blocked by inhibiting tyrosine phosphatases. Serotonergic stimulation of PKC thus activates a tyrosine phosphatase activity associated with the channels, which reverses their constitutive inhibition by tyrosine phosphorylation, representing a novel form of neuromodulation.