Cultured NIH-3T3 cells devoid of endogenous epidermal growth factor (EGF) receptors were transfected with cDNA expression constructs encoding either normal human EGF receptor or a receptor mutated in vitro at Lys-721, a residue that is thought to function as part of the ATP-binding site of the kinase domain. Unlike the wild-type EGF-receptor expressed in these cells, which exhibited EGF-dependent protein tyrosine kinase activity, the mutant receptor lacked protein tyrosine kinase activity and was unable to undergo autophosphorylation and to phosphorylate exogenous substrates. Despite this deficiency, the mutant receptor was normally expressed on the cell surface, and it exhibited both high- and low-affinity binding sites. The addition of EGF to cells expressing wild-type receptors caused the stimulation of various responses, including enhanced expression of proto-oncogenes c-fos and c-myc, morphological changes, and stimulation of DNA synthesis. However, in cells expressing mutant receptors, EGF was unable to stimulate these responses, suggesting that the tyrosine kinase activity is essential for EGF receptor signal transduction.