Heparin-binding EGF-like growth factor (HB-EGF) is synthesized as a transmembrane precursor protein that is anchored to the plasma membrane. The extracellular EGF-like domain acts as a mitogen and motogen upon ectodomain shedding, but the functional roles of the transmembrane and cytoplasmic domains are largely unknown. We demonstrate here that cytoplasmic domain of HB-EGF is phosphorylated by external stimuli, and that the phosphorylation site is involved in HB-EGF-dependent tumorigenesis. Treatment of Vero cells overexpressing human HB-EGF with 12-O-tetradecanoylphorbol-13-acetate (TPA) caused ectodomain shedding of HB-EGF and generated two carboxyl (C)-terminal fragments with distinct electrophoretic mobilities. Mutation analysis showed that Ser207 in the cytoplasmic domain of HB-EGF is phosphorylated upon TPA stimulation, generating two C-terminal fragments with distinct phosphorylation states. Treatment of cells with lysophosphatidic acid, anisomycin, and calcium ionophore, all of which are known to induce ectodomain shedding, also caused phosphorylation of HB-EGF. Although ectodomain shedding and phosphorylation of HB-EGF occurred coordinately, Ala substitution of Ser207 had no effect on TPA-induced or constitutive ectodomain shedding. Injection of cells overexpressing HB-EGF into nude mice showed that Ala substitution of Ser207 reduced the tumorigenic activity of HB-EGF, even though the cell surface level and ectodomain shedding of HB-EGF were not affected by the mutation. Moreover, we found that the cytoplasmic domain of another EGFR ligand, transforming growth factor-alpha, is phosphorylated upon TPA stimulation. Thus, the present results suggest a novel role for the cytoplasmic domain of HB-EGF and other EGF family growth factors that is regulated by phosphorylation.