Increased tyrosine kinase activity of abl oncogene in Philadelphia chromosome positive-leukemic cells leads to activation of p21ras and phosphatidylinositol 3'-kinase (PI 3-Kinase). The mechanism of activation of these signaling pathways is not understood, but numerous studies have focused on the identification and characterization of downstream substrates of BCR/abl tyrosine kinase as potential mediators of oncogenic signaling. It was recently found that the 120 kDa protein product of the c-cbl proto-oncogene is highly tyrosine phosphorylated and associates with BCR/abl in transformed hematopoietic cells. We have characterized further cbl's involvement in BCR/abl mediated tumorigenesis using growth factor independent BCR/abl transformed BaF3 cells. Our experiments show that, in contrast to other cell types, the in vivo interaction of cbl with GRB2 and p85 is significantly enhanced in BCR/abl transformed BaF3 cells and that tyrosine phosphorylation of cbl leads to a direct interaction with GRB2, p85 and abl SH2 domains. A 14-fold increase in cbl associated PI 3-kinase activity in BCR/abl transformed cells suggests that the binding of p85 SH2 domains to tyrosine phosphorylated cbl may contribute to PI 3-kinase activation. Domain analysis studies indicate that both SH3 domains of GRB2 bind to the proline rich region of cbl in quiescent BaF3 cells, whereas GRB2 SH2 domain interacts with a non-contiguous sequence of cbl in transformed cells. Although the interaction of cbl with GRB2 in transformed cells was facilitated by binding of GRB2 to BCR/abl, phosphorylation of cbl and its interaction with p190 BCR/abl remained unaltered in BaF3 cells transformed by p190Y177F BCR/abl mutant which is unable to bind GRB2. The current information and the data presented here suggest that, although cbl lacks src homology domains, it represents a novel intermediate protein which, by interaction with key SH-containing adaptor proteins, may participate in regulation of the Ras and PI 3-kinase pathways in BCR/abl transformed hematopoietic cells.