Cultured NIH-3T3 cells devoid of endogenous EGF-receptors were transfected with cDNA constructs encoding normal human EGF-receptor and with a construct encoding an insertional mutant of the EGF-receptor containing four additional amino acids in the kinase domain after residue 708. Unlike the wild-type receptor expressed in these cells which exhibits EGF-stimulatable protein tyrosine kinase activity, the mutant receptor lacks protein tyrosine kinase activity both in vitro and in vivo. Despite this deficiency the mutant receptor is properly processed, it binds EGF and it exhibits both high and low affinity binding sites. Moreover, it undergoes efficient EGF-mediated endocytosis. However, EGF fails to stimulate DNA synthesis and is unable to stimulate the phosphorylation of S6 ribosomal protein in cells expressing this receptor mutant. Hence, it is proposed that the protein tyrosine kinase activity of EGF-receptor is essential for the initiation of S6 phosphorylation and for DNA synthesis induced by EGF. However, EGF-receptor processing, the expression of high and low affinity surface receptors and receptor internalization, require neither kinase activity nor receptor autophosphorylation. Interestingly, phorbol ester (TPA) fails to abolish the high affinity state and is also unable to stimulate the phosphorylation of this receptor mutant. This result is consistent with the notion that kinase-C phosphorylation of EGF-receptor is essential for the loss of high affinity EGF-receptors caused by TPA.