Early events in ligand-induced endocytosis of the EGF receptor have been examined. A mutant EGF receptor devoid of intrinsic protein-tyrosine kinase activity bound EGF and dimerized normally yet failed to undergo ligand-induced internalization. Immunofluorescence microscopy revealed that receptors lacking kinase activity failed to undergo the ligand-induced internalization characteristic of receptors with kinase activity. Monoclonal anti-phosphotyrosine antibodies effectively inhibited phosphorylation of exogenous substrates in vitro and, when microinjected into cells containing active EGF receptors, prevented internalization of the receptor when cells were subsequently challenged with EGF. These results point to a crucial role for the kinase activity of the EGF receptor in the process of ligand-induced endocytosis of receptors, and imply that a phosphorylated substrate(s) is required.