Discoidin domain receptors (DDRs) 1 and 2, collagen receptors, regulate cell adhesion and a broad range of cell behavior. Their adhesion-dependent regulation of signaling associated with adhesion proteins has not been elucidated. We report a novel mechanism: the cross talk of DDR1 and E-cadherin negatively and adhesion dependently regulated both DDR1 activity and DDR1-suppressed cell spreading. E-cadherin forms complexes with both DDR1 isoforms (a and b). E-cadherin regulates DDR1 activity associated with the cell-junction complexes formed between DDR1 and E-cadherin. These complexes are formed independently of DDR1 activation and of beta-catenin and p120-catenin binding to E-cadherin; they are ubiquitous in epithelial cells. Small interfering RNA-mediated gene silencing of E-cadherin restores both DDR1 activity and DDR1-suppressed cell spreading and increases the apically and basally located DDR1 in E-cadherin-null cells. We conclude that E-cadherin-mediated adhesions decrease DDR1 activity, which subsequently eliminates DDR1-suppressed cell spreading, by sequestering DDR1 to cell junctions, which prevents its contact with collagen ligand.