Epidermal growth factor (EGF) has been shown to enhance cell multiplication or differentiation in a number of developing tissues. We have examined the effects of this growth factor on the biochemical development of explants of fetal rat lung, cultured in serum-free medium for 48 h. EGF enhanced the rate of choline incorporation into phosphatidylcholine and disaturated phosphatidylcholine in a dose dependent fashion. Half maximal stimulation occurred at a concentration of 1.0 nM, similar to the Kd for EGF binding to rat lung cell membranes. There was also significant stimulation of acetate incorporation into all phospholipids, particularly phosphatidylglycerol (539%), and increased distribution of radioactivity from acetate in this phospholipid fraction. Exposure to EGF stimulated PC synthesis in 18- and 19-day explants (term is 22 days) whereas maximal enhancement of DNA synthesis occurred after this time. This sequence differs from that observed during early embryonic development when EGF initially enhances cell multiplication. An additive interaction with regard to enhancement of PC synthesis was observed with EGF and thyroid hormone, but not EGF and dexamethasone. EGF had no effect on the activity of the enzymes of the choline incorporation pathway of phosphatidylcholine synthesis or on the activity of enzymes involved with acidic phospholipid synthesis. Fetal lung EGF content and EGF binding capacity were not increased by glucocorticoid treatment and similarly glucocorticoid binding capacity was not increased by EGF. These data indicate that EGF enhances fetal rat lung phospholipid synthesis in a dose-dependent manner and suggest that this is a direct effect on the lung tissue mediated by specific receptors.