Epidermal growth factor (EGF) undergoes a specific series of alterations during the course of its binding and internalization into cultured fibroblasts. The modified EGF species can be distinguished from each other and from native EGF by their isoelectric points. We employed peptide mapping techniques to determine the nature of these alterations. We found that 125I-EGF with a pI of 4.55 was converted to a pI 4.2 species by removal of 1 or 2 amino acid moieties from the COOH-terminal end of the protein. A pI 4.35 species was generated by a trypsin-like cut between amino acid residues 48 and 49, for a total of 5 amino acid moieties removed from the native EGF. The pI 4.0 species was formed by removal of at least the COOH-terminal arginine from the pI 4.35 species. Thus, upon binding and internalization, EGF was sequentially cleaved in the COOH-terminal region. Removal of the COOH-terminal polypeptide has been shown to dramatically reduce the affinity of EGF for its receptor, raising the possibility that intracellular dissociation of EGF from its receptor may be a direct result of the intracellular processing of EGF.