Dynamic remodeling of the actin cytoskeleton is required for cell spreading, motility, and migration and can be regulated by tyrosine kinase activity. Phosphotyrosine proteomic screening revealed phosphorylation of the lipid-, calcium-, and actin-binding protein annexin A2 (AnxA2) at Tyr23 as a major event preceding ts-v-Src kinase-induced cell scattering. Expression of the phospho-mimicking mutant Y23E-AnxA2 itself was sufficient to induce actin reorganization and cell scattering in MDCK cells. While Y23E-AnxA2, but not Y23A-AnxA2, enhanced Src- or hepatocyte growth factor (HGF)-induced cell scattering, short hairpin RNA-mediated knockdown of AnxA2 inhibited both v-Src- and HGF-induced cell scattering. Three-dimensional branching morphogenesis was induced in wild-type-AnxA2-expressing cells only in the presence of HGF, while Y23E-AnxA2 induced HGF-independent branching morphogenesis. Knockdown of AnxA2 prevented lumen formation during cystogenesis. The Y23E-AnxA2-induced scattering was associated with dephosphorylation/activation of the actin-severing protein cofilin. Likewise, inactive S3E-cofilin and constitutively active LIM kinase, a direct upstream kinase of cofilin, inhibited Y23E-AnxA2-induced scattering. Together, our studies indicate an essential role for AnxA2 phosphorylation in regulating cofilin-dependent actin cytoskeletal dynamics in the context of cell scattering and branching morphogenesis.