Ephrins are cell surface-associated ligands for Eph receptors and are important regulators of morphogenic processes such as axon guidance and angiogenesis. Transmembrane ephrinB ligands act as "receptor-like" signaling molecules, in part mediated by tyrosine phosphorylation and by engagement with PDZ domain proteins. However, the underlying cell biology and signaling mechanisms are poorly understood. Here we show that Src family kinases (SFKs) are positive regulators of ephrinB phosphorylation and phosphotyrosine-mediated reverse signaling. EphB receptor engagement of ephrinB causes rapid recruitment of SFKs to ephrinB expression domains and transient SFK activation. With delayed kinetics, ephrinB ligands recruit the cytoplasmic PDZ domain containing protein tyrosine phosphatase PTP-BL and are dephosphorylated. Our data suggest the presence of a switch mechanism that allows a shift from phosphotyrosine/SFK-dependent signaling to PDZ-dependent signaling.