β2-Adrenergic receptors (β2AR) transactivate epidermal growth factor receptors (EGFR) through formation of a β2AR-EGFR complex that requires activation of Src to mediate signaling. Here, we show that both lipid and protein kinase activities of the bifunctional phosphoinositide 3-kinase (PI3K) enzyme are required for β2AR-stimulated EGFR transactivation. Mechanistically, the generation of phosphatidylinositol (3,4,5)-tris-phosphate (PIP3) by the lipid kinase function stabilizes β2AR-EGFR complexes while the protein kinase activity of PI3K regulates Src activation by direct phosphorylation. The protein kinase activity of PI3K phosphorylates serine residue 70 on Src to enhance its activity and induce EGFR transactivation following βAR stimulation. This newly identified function for PI3K, whereby Src is a substrate for the protein kinase activity of PI3K, is of importance since Src plays a key role in pathological and physiological signaling.