Although it is known that the Src family tyrosine kinase Lyn initiates Fcepsilon receptor I (FcepsilonRI) signaling by phosphorylation of the receptor subunits, regulation of Lyn kinase activity and its consequences for receptor signaling are incompletely understood. Using a phospho-Lyn-specific antiserum, we show an increased phosphorylation of the Lyn C-terminal regulatory tyrosine and decreased Lyn kinase activity during FcepsilonRI-mediated mast cell activation. Mutant Lyn, defective in the C-terminal tyrosine, constitutively phosphorylated several substrates in resting cells, but did not cause FcepsilonRI internalization or spontaneous degranulation. FcepsilonRI-induced signaling in the presence of constitutively active Lyn exhibited enhanced phosphorylation of the receptor subunits, Syk, LAT, Gab2, phospholipase C (PLC)gamma1 and PLCgamma2, and production of phosphatidylinositol 3,4,5-trisphosphate. Although enzymatic activities of PLCgamma1 and PLCgamma2 were also up-regulated, amounts of inositol 1,4,5-trisphosphate, mobilization of intracellular calcium and degranulation were suppressed. Additionally, constitutively active Lyn was strikingly less efficient than wild-type Lyn in restoring the receptor-mediated calcium responses in bone marrow mast cells derived from Lyn(-/-) mice. These findings pinpoint the tight regulation of Lyn kinase activity as a critical event in mast cell degranulation.