An affinity labeling technique used previously for identification of a membrane receptor for epidermal growth factor (EGF) was exploited to investigate the physiological fate of receptor after binding of EGF. Incubation of affinity-labeled cells at 37 degrees resulted in a time-dependent loss of radioactivity from the EGF-receptor covalent complex (M(r) 190,000). Ninety percent of the radioactivity lost from the band of M(r) 190,000 during a 1-hr incubation at 37 degrees appeared in three bands of M(r) 62,000, 47,000, and 37,000. The crosslinked EGF-receptor complex (M(r) 190,000) on intact cells was accessible to the action of trypsin at 4 degrees and cofractionated with the plasmalemmal fraction. The proteolytic processing products of receptor were inaccessible to trypsin and banded with the lysosomal fraction upon subcellular fractionation. The rate of internalization and proteolytic processing of radiolabeled receptor was the same as the rate of reduction of binding activity induced by EGF. A study of the relationship between EGF-induced receptor internalization and processing, and stimulation of DNA synthesis, showed that both these processes were half-maximally stimulated at approximately 0.1 nM EGF, a concentration at which only 10% of the receptor sites are occupied. These data indicate that at concentrations of EGF subsaturating for binding but optimal for biological activity, there is a slow, continuous process of receptor internalization and degradation which could be limiting for EGF-induced mitogenesis.