The role of Src family tyrosine kinases in cellular proliferation is well established; however, their role in cellular differentiation is less well understood. In this study we have investigated the role played by Src in the differentiation of squamous epithelial cells. Transfection of activated Src into A431 cells resulted in morphological changes that resembled epidermal differentiation. When we used Src mutants to characterize the observed phenotypic changes, we found that protein tyrosine kinase activity, correct membrane localization and the activity of the SH2 domain were required, but the SH3 domain was not. Furthermore, downstream activity of Ras was not required for the Src-mediated changes in A431 cells.