To assess the functional significance of phosphorylation of the epidermal growth factor (EGF) receptor at Thr654, we compared the effects of 12-O-tetradecanoyl-13-acetate (TPA) on ligand-induced internalization and down-regulation between wild-type and mutant receptors that contain an alanine substitution at position 654. Activation of protein kinase C with TPA blocked EGF-induced internalization and down-regulation of Thr654 receptors and inhibited in vivo tyrosine kinase activity by 80%. TPA did not inhibit transferrin receptor internalization or constitutive EGF receptor internalization, suggesting that protein kinase C activation inhibits only the ligand-induced process. Inhibition by TPA of induced internalization, down-regulation, and kinase activity required threonine at position 654 since full-length Ala654 EGF receptors were significantly resistant to TPA inhibition of these ligand-induced activities. However, C'-terminal truncation further enhanced this resistance to TPA inhibition. The EGF-dependent internalization of kinase-inactive receptors truncated at residue 1022 was also impaired by TPA in Thr654 receptors, but not in Ala654 receptors, indicating that phosphorylation at Thr654 also interferes with tyrosine kinase-independent receptor activities. We conclude that the dominant regulatory effect of protein kinase C on the EGF receptor is mediated through phosphorylation at Thr654 which effectively inactivates the receptor. The submembrane region of the EGF receptor appears to regulate transmission of conformational information from the extracellular ligand-binding site to the cytoplasmic kinase and regulatory domains.