The glial cell line-derived neurotrophic factor (GDNF) family ligands (GFLs) are neurotrophic factors that influence several aspects of the developing and injured nervous system. GFLs signal through a common receptor tyrosine kinase (Ret) and one of the four ligand-binding co-receptors (GFRalpha1 to 4). Ligand-induced translocation of Ret to lipid rafts, where it interacts with the nonreceptor tyrosine kinase Src, is a prerequisite for full biological activity of these neurotrophic factors. This interaction and subsequent activation of Src are required for GFL-mediated neuronal survival, neurite outgrowth, or cell proliferation. Here we show by multiple approaches that Ret tyrosine 981 constitutes the major binding site of the Src homology 2 domain of Src and therefore the primary residue responsible for Src activation upon Ret engagement. Other tyrosines such as 1015 and 1029 may contribute to the overall interaction between Ret and Src, as judged by overexpression experiments. By generating a phosphospecific antibody, we demonstrate that tyrosine 981 is a novel autophosphorylation site in Ret. Importantly, we also show that this tyrosine becomes phosphorylated in dissociated sympathetic neurons after ligand stimulation. Mutation of tyrosine 981 to phenylalanine reduces GDNF-mediated survival in a transfected cerebellar granule neuron paradigm.