A long-standing mystery shrouds the mechanism by which catalytically repressed receptor tyrosine kinase domains accomplish transphosphorylation of activation loop (A-loop) tyrosines. Here we show that this reaction proceeds via an asymmetric complex that is thermodynamically disadvantaged because of an electrostatic repulsion between enzyme and substrate kinases. Under physiological conditions, the energetic gain resulting from ligand-induced dimerization of extracellular domains overcomes this opposing clash, stabilizing the A-loop-transphosphorylating dimer. A unique pathogenic fibroblast growth factor receptor gain-of-function mutation promotes formation of the complex responsible for phosphorylation of A-loop tyrosines by eliminating this repulsive force. We show that asymmetric complex formation induces a more phosphorylatable A-loop conformation in the substrate kinase, which in turn promotes the active state of the enzyme kinase. This explains how quantitative differences in the stability of ligand-induced extracellular dimerization promotes formation of the intracellular A-loop-transphosphorylating asymmetric complex to varying extents, thereby modulating intracellular kinase activity and signaling intensity.