The replication of human epidermoid carcinoma A431 cells is inhibited by epidermal growth factor (EGF), with 5 ng/ml of EGF causing 50% inhibition of cellular proliferation. EGF resistant clones isolated from A431 cells were able to replicate in the presence of 100 ng/ml of EGF. That this insensitivity to EGF was probably due to a decrease in the expression of EGF receptors (EGFR) on the cell surface was shown using an EGFR cDNA probe to detect a 68% to 85% decrease relative to parental cells in the amount of EGFR mRNA in the EGF resistant clones. A corresponding decrease in surface EGFR levels was also detected in EGF resistant clones as measured by 125I-EGF binding. Eighteen percent of A431 cells cultured in serum-free medium for 6 days entered a pathway of terminal differentiation, as expressed by the formation of envelope-competent cells, whereas EGF resistant clones exhibited a considerably greater capacity to mature, even when cultured in serum-containing medium. The findings suggest that the concentration of EGFRs is important for the capacity of epidermal cells to undergo terminal differentiation in vitro.