Recent studies provide evidence that defective receptors can function as a dominant negative mutation suppressing the action of wild-type receptors. This causes various diminished responses in cell culture and developmental disorders in murine embryogenesis. Here, we describe a model system and a potential mechanism underlying the dominant suppressing response caused by defective epidermal growth factor (EGF) receptors. We used cultured 3T3 cells coexpressing human wild-type receptors and an inactive deletion mutant lacking most of the cytoplasmic domain. When expressed alone, EGF was able to stimulate the dimerization of either wild-type or mutant receptors in living cells as revealed by chemical covalent cross-linking experiments. In response to EGF, heterodimers and homodimers of wild-type and mutant receptors were observed in cells coexpressing both receptor species. However, only homodimers of wild-type EGF receptors underwent EGF-induced tyrosine autophosphorylation in living cells. These results indicate that the integrity of both receptor moieties within receptor dimers is essential for kinase activation and autophosphorylation. Moreover, the presence of mutant receptors in cells expressing wild-type receptors diminished the number of high-affinity binding sites for EGF, reduced the rate of receptor endocytosis and degradation, and diminished biological signalling via EGF receptors. We propose that heterodimerization with defective EGF receptors functions as a dominant negative mutation suppressing the activation and response of normal receptors by formation of unproductive heterodimers.