Cells degrade extracellular matrix (ECM) barriers at focal locations by the formation of membrane protrusions called invadopodia. Polymerization of the actin cytoskeleton is critical to the extension of these processes into the ECM. We used a short interference RNA/rescue strategy to investigate the role of cortactin in the formation of Src-induced invadopodia in 3T3 fibroblasts, and subsequent degradation of the ECM. Cortactin-depleted cells did not form invadopodia or degrade the ECM. Functional invadopodia were restored in cortactin-depleted cells by expression of full-length cortactin, and fragments that contained the intact actin-binding repeats. Mutation of the three Src-targeted Tyr sites to Phe caused a loss in its rescuing ability, while mutation of the Erk phosphorylation sites had little effect on invadopodia formation. Interestingly, knock-down of cortactin did not affect the formation of lamellipodia and only slightly attenuated random cell motility. Our data shows that formation of functional invadopodia requires interaction between cortactin and filamentous actin, while interaction with SH3- and NTA-binding partners plays a less significant role. Furthermore, phosphorylation of cortactin by Src, but not by Erk, is essential for functional invadopodia formation. These results also suggest that cortactin plays a different role in invadopodia-dependent ECM degradation and lamellipodia formation in cell movement.