RECEPTOR tyrosine kinases of the EPH class have been implicated in the control of axon guidance and fascieulation^1–7, in regulating cell migration⁸, and in defining compartments in the developing embryo^9–11. Efficient activation of EPH receptors generally requires that their ligands be anchored to the cell surface, either through a transmembrane (TM) region or a glycosyl phosphatidylinositol (GPI) group¹². These observations have suggested that EPH receptors can transduce signals initiated by direct cell–cell interaction. Genetic analysis of Nuk, a murine EPH receptor that binds TM ligands, has raised the possibility that these ligands might themselves have a signalling function⁶. Consistent with this, the three known TM ligands have a highly conserved cytoplasmic region, with multiple potential sites for tyrosine phosphorylation^12–17. Here we show that challenging cells that express the TM ligands Elk-L or Htk-L with the clustered ectodomain of Nuk induces phosphorylation of the ligands on tyrosine, a process that can be mimicked both in vitro and in vivo by an activated Src tyrosine kinase. Co-culture of cells expressing a TM ligand with cells expressing Nuk leads to tyrosine phosphorylation of both the ligand and Nuk. These results suggest that the TM ligands are associated with a tyrosine kinase, and are inducibly phosphorylated upon binding Nuk, in a fashion reminiscent of cytokine receptors¹⁸. Furthermore, we show that TM ligands, as well as Nuk, are phosphorylated on tyrosine in mouse embryos, indicating that this is a physiological process. EPH receptors and their TM ligands therefore mediate bidirectional cell signalling.