The capacity of epidermal growth factor (EGF) or transforming growth factor-alpha (TGF-alpha) to induce internalization and degradation of the EGF receptor was compared in NIH-3T3 cells expressing the human EGF receptor. This study was initiated following the observation that TGF-alpha was much less efficient relative to EGF in generating a Mr = 125,000 amino-terminally truncated degradation product from the mature EGF receptor (EGF-dependent generation of this degradation product is described in S.J. Decker, J. Biol. Chem., 264:17641-17644). Pulse-chase experiments revealed that EGF generally stimulated EGF receptor degradation to a greater extent than TGF-alpha. Both ligands induced EGF receptor internalization to similar degrees. However, recovery of [125I]-EGF binding following incubation with EGF or TGF-alpha was much faster for TGF-alpha treated cells. Recovery of [125I]-EGF binding after TGF-alpha treatment did not appear to require protein synthesis. Tyrosine phosphorylation of EGF receptor from cells treated with TGF-alpha decreased more rapidly following removal of TGF-alpha compared to cells treated similarly with EGF. These data suggest that EGF routes the EGF receptor directly to a degradative pathway, whereas TGF-alpha allows receptor recycling prior to degradation, and that tyrosine phosphorylation could play a role in this differential receptor processing.