Phospholipid scramblase (PLSCR1) is a multiply palmitoylated, calcium-binding endofacial membrane protein proposed to mediate transbilayer movement of plasma membrane phospholipids. PLSCR1 is a component of membrane lipid rafts and has been shown to both physically and functionally interact with activated epidermal growth factor (EGF) receptors and other raft-associated cell surface receptors. Cell stimulation by EGF results in Tyr phosphorylation of PLSCR1, its association with both Shc and EGF receptors, and rapid cycling of PLSCR1 between plasma membrane and endosomal compartments. We now report evidence that upon EGF stimulation, PLSCR1 is phosphorylated by c-Src, within the tandem repeat sequence 68VYNQPVYNQP77. The in vivo interaction between PLSCR1 and Shc requires the Src-mediated phosphorylation on tyrosines 69 and 74. In in vitro pull down studies, phosphorylated PLSCR1 was found to bind directly to Shc through the phosphotyrosine binding domain. Consistent with the potential role of PLSCR1 in growth factor signaling pathways, granulocyte precursors derived from mice deficient in PLSCR1 show impaired proliferation and maturation under cytokine stimulation. Using PLSCR1-/- embryonic fibroblasts and kidney epithelial cells, we now demonstrate that deletion of PLSCR1 from the plasma membrane reduces the activation of c-Src by EGF, implying that PLSCR1 normally facilitates receptor-dependent activation of this kinase. We propose that PLSCR1, through its interaction with Shc, promotes Src kinase activation through the EGF receptor.