Bcr-Abl is a dysregulated tyrosine kinase whose mechanism of activation is unclear. Here, we demonstrate that, like c-Abl, Bcr-Abl is negatively regulated through its SH3 domain. Kinase activity, transformation, and leukemogenesis by Bcr-Abl are greatly impaired by mutations of the Bcr coiled-coil domain that disrupt oligomerization, but restored by an SH3 point mutation that blocks ligand binding or a complementary mutation at the intramolecular SH3 binding site defined in c-Abl. Phosphorylation of tyrosines in the activation loop of the catalytic domain and the linker between the SH2 and catalytic domains (SH2-CD linker) is dependent on oligomerization and required for leukemogenesis. These results suggest that Bcr-Abl has a monomeric, unphosphorylated state with the SH3 domain engaged intramolecularly to Pro1124 in the SH2-CD linker, the form that is sensitive to the inhibitor imatinib (STI-571). The sole function of the coiled-coil domain is to disrupt the autoinhibited conformation through oligomerization and intermolecular autophosphorylation.