Epidermal growth factor (EGF) is a 53-amino acid polypeptide which is a potent mitogen for cultured cells. The kidney has recently been shown to be a major site of synthesis for the EGF precursor. EGF infusions in sheep result in a diuresis and natriuresis despite a fall in GFR, suggesting a direct tubular effect. Using in vitro microperfusion of rabbit cortical collecting tubules (CCTs) at 37 degrees C, we examined the effect of EGF on the transepithelial voltage (Vt) and arginine vasopressin (AVP)-stimulated hydraulic conductivity (Lp). Pretreatment with peritubular EGF at concentrations from 10(-8) to 10(-12) M resulted in a 50% inhibition of both AVP- and 8-chlorophenythio-cyclic AMP-stimulated peak Lp. This effect was reversed by the protein kinase C inhibitor, staurosporine, but unaffected by indomethacin. CCTs with an initially negative Vt, depolarized after exposure to bath EGF. 10(-8) M EGF applied from the lumen had no effect on either Lp or Vt. Specific binding of 20 nM 125I-EGF to microdissected CCTs was also demonstrated. These results suggest that EGF can modulate both salt and water transport in the CCT via a receptor linked to protein kinase C activation.