The c-Abl tyrosine kinase is inhibited by mechanisms that are poorly understood. Disruption of these mechanisms in the Bcr-Abl oncoprotein leads to several forms of human leukemia. We found that like Src kinases, c-Abl 1b is activated by phosphotyrosine ligands. Ligand-activated c-Abl is particularly sensitive to the anti-cancer drug STI-571/Gleevec/imatinib (STI-571). The SH2 domain-phosphorylated tail interaction in Src kinases is functionally replaced in c-Abl by an intramolecular engagement of the N-terminal myristoyl modification with the kinase domain. Functional studies coupled with structural analysis define a myristoyl/phosphotyrosine switch in c-Abl that regulates docking and accessibility of the SH2 domain. This mechanism offers an explanation for the observed cellular activation of c-Abl by tyrosine-phosphorylated proteins, the intracellular mobility of c-Abl, and it provides new insights into the mechanism of action of STI-571.