Epidermal growth factor (EGF) may either stimulate or inhibit cell growth. To elucidate the mechanism of these varied effects, we compared EGF action in parental A431 cells in which cell growth is inhibited, and clone 15, a mutant of these cells resistant to EGF growth inhibition. In both lines, EGF receptor was present in similar concentrations and underwent tyrosine phosphorylation to the same extent. Likewise, in both lines, acute exposure to EGF stimulated an increase in free cytoplasmic [Ca2+], as well as a similar increase in phosphorylation of lipocortin 1, a major substrate for the EGF receptor kinase whose phosphorylation is calcium-dependent. On the other hand, pretreatment of clone 15 cells with EGF for 72 h abolished EGF-induced phosphorylation of lipocortin 1 and led to a loss of the increase in cytoplasmic free [Ca2+], whereas no such desensitization was seen in the parental A431 cells. These data indicate a link between EGF-induced increase in cytoplasmic calcium, lipocortin phosphorylation, and cell growth and suggest that differences in mechanisms of desensitization to these immediate actions of EGF may lead to altered growth response to this hormone.