We have located the distal boundary of the tyrosine kinase domain of the EGF receptor and have identified a distinct sequence in the C' terminus required for EGF-dependent receptor internalization, leading to receptor down-regulation and degradation. Within this receptor domain, an 18 amino acid highly negatively charged region of predicted helical structure is required both for endocytosis via a high-affinity, saturable pathway and for ligand-stimulated increases in cytosolic calcium. In contrast to kinase-inactive, internalization-competent receptors, kinase-active, internalization-defective receptors effectively signaled gene transcription, morphological transformation, and growth. These observations support the hypothesis that mitogenic responses to EGF are mediated by activation of the intrinsic protein tyrosine kinase activity of the membrane-bound receptor, with ligand-induced internalization serving to terminate the signal.