The lysosomal membrane protein, TMEM106b, has been identified as a risk factor for frontotemporal lobar degeneration with TDP-43 inclusions (FTLD-TDP). Although the cellular function of TMEM106b is poorly understood, it has been shown to regulate lysosomal morphology and trafficking and autophagy in neurons. Recently, there has been interest in the discovery of TMEM106b amyloid fibrils formed by its lumenal C-terminus, which have been observed in various neurodegenerative disorders and healthy aged brain. In a high-throughput phosphoproteomic screen, we identified TMEM106b as a substrate for the tyrosine kinase C-Src, and its neuronal splice variant N1-Src. We aimed to assess how this novel tyrosine phosphorylation event regulates TMEM106b function. The identified TMEM106b phosphosite lies within a putative N-terminal YXXΦ sorting motif. Indeed the AP2 μ1 (AP2M1) subunit has been shown to bind TMEM106b by co-immunoprecipitation. We synthesised recombinant wild type and a phosphonull mutant N-terminal TMEM106b(1-96) and confirmed phosphorylation by N1-Src in vitro. Both the phosphonull mutant and in vitro tyrosine phosphorylated TMEM106b(1-96) demonstrated reduced binding to AP2M1 compared to the unphosphorylated wild type protein. These data point to a role for neuronal Src tyrosine phosphorylation in the trafficking of TMEM106b. Since Src activity is upregulated in neurodegeneration it will be important to discover whether aberrant phosphorylation of TMEM106b is linked to its role in disease.