The tyrosine kinase Src upregulates the activity of the N-methyl-D-aspartate subtype of glutamate receptor (NMDAR) and tyrosine phosphorylation of this receptor is critical for induction of NMDAR-dependent plasticity of synaptic transmission. A binding partner for Src within the NMDAR complex is the protein PSD-95. Here we demonstrate an interaction of PSD-95 with Src that does not require the well-characterized domains of PSD-95. Rather, we show binding to Src through a 12-amino-acid sequence in the N-terminal region of PSD-95, a region not previously known to participate in protein-protein interactions. This region interacts directly with the Src SH2 domain. Contrary to typical SH2 domain binding, the PSD-95-Src SH2 domain interaction is phosphotyrosine-independent. Binding of the Src-interacting region of PSD-95 inhibits Src kinase activity and reduces NMDAR phosphorylation. Intracellularly administering a peptide matching the Src SH2 domain-interacting region of PSD-95 depresses NMDAR currents in cultured neurons and inhibits induction of long-term potentiation in hippocampus. Thus, the PSD-95-Src SH2 domain interaction suppresses Src-mediated NMDAR upregulation, a finding that may be of broad importance for synaptic transmission and plasticity.