The c-Abl tyrosine (Tyr) kinase is activated after platelet-derived-growth factor receptor (PDGFR) stimulation in a manner that is partially dependent on Src kinase activity. However, the activity of Src kinases alone is not sufficient for activation of c-Abl by PDGFR. Here we show that functional phospholipase C-gamma1 (PLC-gamma1) is required for c-Abl activation by PDGFR. Decreasing cellular levels of phosphatidylinositol-4,5-bisphosphate (PtdIns(4,5)P2) by PLC-gamma1-mediated hydrolysis or dephosphorylation by an inositol polyphosphate 5-phosphatase (Inp54) results in increased Abl kinase activity. c-Abl functions downstream of PLC-gamma1, as expression of kinase-inactive c-Abl blocks PLC-gamma1-induced chemotaxis towards PDGF-BB. PLC-gamma1 and c-Abl form a complex in cells that is enhanced by PDGF stimulation. After activation, c-Abl phosphorylates PLC-gamma1 and negatively modulates its function in vivo. These findings uncover a newly discovered functional interdependence between non-receptor Tyr kinase and lipid signalling pathways.