The transcription factor CCAAT/enhancer-binding protein delta (C/EBPδ, CEBPD) is a tumor suppressor that is downregulated during breast cancer progression but may also promote metastasis. Here, we have investigated the mechanism(s) regulating C/EBPδ expression and its role in human breast cancer cells. We describe a novel pathway by which the tyrosine kinase Src downregulates C/EBPδ through the SIAH2 E3 ubiquitin ligase. Src phosphorylates SIAH2 in vitro and leads to tyrosine phosphorylation and activation of SIAH2 in breast tumor cell lines. SIAH2 interacts with C/EBPδ, but not C/EBPβ, and promotes its polyubiquitination and proteasomal degradation. Src/SIAH2-mediated inhibition of C/EBPδ expression supports elevated cyclin D1 levels, phosphorylation of retinoblastoma protein (Rb), motility, invasive properties, and survival of transformed cells. Pharmacological inhibition of Src family kinases by SKI-606 (bosutinib) induces C/EBPδ expression in an SIAH2-dependent manner, which is necessary for "therapeutic" responses to SKI-606 in vitro. Ectopic expression of degradation-resistant mutants of C/EBPδ, which do not interact with SIAH2 and/or cannot be polyubiquitinated, prevents full transformation of MCF-10A cells by activated Src (Src truncated at amino acid 531 [Src-531]) in vitro. These data reveal that C/EBPδ expression can be regulated at the protein level by oncogenic Src kinase signals through SIAH2, thus contributing to breast epithelial cell transformation.