Resistance to vandetanib, a type I RET kinase inhibitor, developed in a patient with metastatic lung adenocarcinoma harboring a CCDC6-RET fusion that initially exhibited a response to treatment. The resistant tumor acquired a secondary mutation resulting in a serine-to-phenylalanine substitution at codon 904 in the activation loop of the RET kinase domain. The S904F mutation confers resistance to vandetanib by increasing the ATP affinity and autophosphorylation activity of RET kinase. A reduced interaction with the drug is also observed in vitro for the S904F mutant by thermal shift assay. A crystal structure of the S904F mutant reveals a small hydrophobic core around F904 likely to enhance basal kinase activity by stabilizing an active conformer. Our findings indicate that missense mutations in the activation loop of the kinase domain are able to increase kinase activity and confer drug resistance through allosteric effects.