The W/c-kit and Steel loci respectively encode a receptor tyrosine kinase (Kit) and its extracellular ligand, Steel factor, which are essential for the development of hematopoietic, melanocyte, and germ cell lineages in the mouse. To determine the biochemical basis of the Steel/W developmental pathway, we have investigated the response of the Kit tyrosine kinase and several potential cytoplasmic targets to stimulation with Steel in mast cells derived from normal and mutant W mice. In normal mast cells, Steel induces Kit to autophosphorylate on tyrosine and bind to phosphatidylinositol 3'-kinase (PI3K) and phospholipase C-gamma 1 but not detectably to Ras GTPase-activating protein. Additionally, we present evidence that Kit tyrosine phosphorylation acts as a switch to promote complex formation with PI3K. In mast cells from mice homozygous for the W42 mutant allele, Kit is not tyrosine phosphorylated and fails to bind PI3K following Steel stimulation. In contrast, in the transformed mast cell line P815, Kit is constitutively phosphorylated and binds to PI3K in the absence of ligand. These results suggest that Kit autophosphorylation and its physical association with a unique subset of cytoplasmic signaling proteins are critical for mammalian development.