Efficient binding of active phosphatidylinositol (PI) 3'-kinase to the autophosphorylated macrophage colony stimulating factor receptor (CSF-1R) requires the noncatalytic kinase insert (KI) region of the receptor. To test whether this region could function independently to bind PI 3'-kinase, the isolated CSF-1R KI was expressed in Escherichia coli, and was inducibly phosphorylated on tyrosine. The tyrosine phosphorylated form of the CSF-1R KI bound PI 3'-kinase in vitro, whereas the unphosphorylated form had no binding activity. The p85 alpha subunit of PI 3'-kinase contains two Src homology (SH)2 domains, which are implicated in the interactions of signalling proteins with activated receptors. Bacterially expressed p85 alpha SH2 domains complexed in vitro with the tyrosine phosphorylated CSF-1R KI. Binding of the CSF-1R KI to PI 3'-kinase activity, and to the p85 alpha SH2 domains, required phosphorylation of Tyr721 within the KI domain, but was independent of phosphorylation at Tyr697 and Tyr706. Tyr721 was also critical for the association of activated CSF-1R with PI 3'-kinase in mammalian cells. Complex formation between the CSF-1R and PI 3'-kinase can therefore be reconstructed in vitro in a specific interaction involving the phosphorylated receptor KI and the SH2 domains of p85 alpha.