Sprouty proteins are evolutionarily conserved negative feedback regulators of multiple receptor tyrosine kinases. Mammalian versions of these proteins differentially regulate signaling induced by the fibroblast and the epidermal growth factors (FGF and EGF, respectively). Herein we show that, although both growth factors elevate expression of Sprouty-2, FGF- and not EGF-induced activation of the Erk/MAPK pathway is inhibited by Sprouty-2. Attenuation of FGF-signaling is accompanied by the induction of Sprouty-2 phosphorylation on the amino-terminal as well as carboxyl-terminal tyrosine residues, which are less effectively modified upon EGF treatment. Mutagenesis of carboxyl-terminal tyrosines, especially a newly identified phosphorylation site, tyrosine 227, impaired the inhibitory activity of Sprouty-2. These results attribute a novel role for carboxyl-terminal tyrosine residues and yet unidentified phosphotyrosine-binding proteins in the differential regulation of Sprouty-2 activity.