Transformed epithelial cells often are characterized by a fibroblastic or mesenchymal morphology. These cells exhibit altered cell-cell and cell- substrate interactions. Here we have identified changes in the adhesions and cytoskeletal interactions of transformed epithelial cells that contribute to their altered morphology. Using MCF-10A human breast epithelial cells as a model system, we have found that transformation by an activated form of ras is characterized by less developed adherens-type junctions between cells but increased focal adhesions. Contributing to the modified adherens junctions of the transformed cells are decreased interactions among β-catenin, E- cadherin, and the actin cytoskeleton. The ras-transformed cells reveal elevated phosphotyrosine in many proteins, including β-catenin and p120 Cas. Whereas in the normal cells β-catenin is found in association with E- cadherin, p120 Cas is not. In the ras-transformed cells, the situation is reversed; tyrosine-phosphorylated p120 Cas, but not tyrosine-phosphorylated β-catenin, now is detected in E-cadherin complexes. The tyrosine- phosphorylated β-catenin also shows increased detergent solubility, suggesting a decreased association with the actin cytoskeleton. p120 Cas, whether tyrosine phosphorylated or not, partitions into the detergent soluble fraction, suggesting that it is not tightly bound to the actin cytoskeleton in either the normal or ras-transformed cells. Inhibitors of tyrosine kinases decrease the level of tyrosine phosphorylation and restore a normal epithelial morphology to the ras-transformed cells. In particular, decreased tyrosine phosphorylation of β-catenin is accompanied by increased interaction with both E-cadherin and the detergent insoluble cytoskeletal fraction. These results suggest that elevated tyrosine phosphorylation of proteins such as β-catenin and p120 Cas contribute to the altered adherens junctions of ras-transformed epithelia.