The focal adhesion kinase (FAK) is a key regulator of cell migration. Phosphorylation at Tyr-397 activates FAK and creates a binding site for Src family kinases. FAK phosphorylates the cytoskeletal protein alpha-actinin at Tyr-12. Here we report that protein-tyrosine phosphatase 1B (PTP 1B) is an alpha-actinin phosphatase. PTP 1B-dependent dephosphorylation of alpha-actinin was seen in COS-7 cells and PTP 1B-null fibroblasts reconstituted with PTP 1B. Furthermore, we show that coexpression of wild-type alpha-actinin and PTP 1B causes dephosphorylation at Tyr-397 in FAK. No dephosphorylation was observed in cells coexpressing the alpha-actinin phosphorylation mutant Y12F and PTP 1B. Furthermore, the phosphorylation at four other sites in FAK was not altered by PTP 1B. In addition, we found that phosphorylated alpha-actinin bound to Src and reduced the binding of FAK to Src. The dephosphorylation at Tyr-397 in FAK triggered by wild-type alpha-actinin and PTP 1B caused a significant increase in cell migration. We propose that phosphorylated alpha-actinin disrupts the FAK x Src complex exposing Tyr-397 in FAK to PTP 1B. These findings uncover a novel feedback loop involving phosphorylated alpha-actinin and PTP 1B that regulates FAK x Src interaction and cell migration.