The tumor promoter phorbol ester (TPA) modulates the binding affinity and the mitogenic capacity of the epidermal growth factor (EGF) receptor. Moreover, TPA-induced kinase C phosphorylation occurs mainly on Thr-654 of the EGF receptor, suggesting that the phosphorylation state of this residue regulates ligand-binding affinity and kinase activity of the EGF receptor. To examine the role of this residue, we prepared a Tyr-654 EGF receptor cDNA construct by in vitro site-directed mutagenesis. Like the wild-type receptor, the mutant receptor exhibited typical high- and low-affinity binding sites when expressed on the surface of NIH 3T3 cells. Moreover, TPA regulated the affinity of both wild-type and mutant receptors and stimulated receptor phosphorylation of serine and threonine residues other than Thr-654. The addition of TPA to NIH 3T3 cells expressing a wild-type human EGF receptor blocked the mitogenic capacity of EGF. However, this inhibition did not occur in cells expressing the Tyr-654 EGF receptor mutant. In the latter cells, EGF was able to stimulate DNA synthesis even in the presence of inhibitory concentrations of TPA. While phosphorylation of sites other than Thr-654 may regulate ligand-binding affinity, the phosphorylation of Thr-654 by kinase C appears to provide a negative control mechanism for EGF-induced mitogenesis in mouse NIH 3T3 fibroblasts.