Platelet/endothelial cell adhesion molecule (PECAM-1) is a cell adhesion molecule of the immunoglobulin superfamily that plays a role in a number of vascular processes including leukocyte transmigration through endothelium. The presence of a specific 19- amino acid exon within the cytoplasmic domain of PECAM-1 regulates the binding specificity of the molecule; specifically, isoforms containing exon 14 mediate heterophilic cell-cell aggregation while those variants missing exon 14 mediate homophilic cell-cell aggregation. To more precisely identify the region of exon 14 responsible for ligand specificity, a series of deletion mutants were created in which smaller regions of exon 14 were removed. After transfection into L cells, they were tested for their ability to mediate aggregation. For heterophilic aggregation to occur, a conserved 5-amino acid region (VYSEI in the murine sequence or VYSEV in the human sequence) in the mid-portion of the exon was required. A final construct, in which this tyrosine was mutated into a phenylalanine, aggregated in a homophilic manner when transfected into L cells. Inhibition of phosphatase activity by exposure of cells expressing wild type or mutant forms of PECAM-1 to sodium orthovanadate resulted in high levels of cytoplasmic tyrosine phosphorylation and led to a switch from heterophilic to homophilic aggregation. Our data thus indicate either loss of this tyrosine from exon 14 or its phosphorylation results in a change in ligand specificity from heterophilic to homophilic binding. Vascular cells could thus determine whether PECAM-1 functions as a heterophilic or homophilic adhesion molecule by processes such as alternative splicing or by regulation of the balance between tyrosine phosphorylation or dephosphorylation. Defining the conditions under which these changes occur will be important in understanding the biology of PECAM-1 in transmigration, angiogenesis, development, and other processes in which this molecule plays a role.