The Drosophila kelch gene encodes a member of a protein superfamily defined by the presence of kelch repeats. In Drosophila, Kelch is required to maintain actin organization in ovarian ring canals. We set out to study the actin cross-linking activity of Kelch and how Kelch function is regulated. Biochemical studies using purified, recombinant Kelch protein showed that full-length Kelch bundles actin filaments, and kelch repeat 5 contains the actin binding site. Two-dimensional electrophoresis demonstrated that Kelch is tyrosine phosphorylated in a src64-dependent pathway. Site-directed mutagenesis determined that tyrosine residue 627 is phosphorylated. A Kelch mutant with tyrosine 627 changed to alanine (KelY627A) rescued the actin disorganization phenotype of kelch mutant ring canals, but failed to produce wild-type ring canals. Electron microscopy demonstrated that phosphorylation of Kelch is critical for the proper morphogenesis of actin during ring canal growth, and presence of the nonphosphorylatable KelY627A protein phenocopied src64 ring canals. KelY627A protein in ring canals also dramatically reduced the rate of actin monomer exchange. The phenotypes caused by src64 mutants and KelY627A expression suggest that a major function of Src64 signaling in the ring canal is the negative regulation of actin cross-linking by Kelch.