A431 malignant keratinocytes, although derived from a muco-cutaneous carcinoma of the vulva, fail to achieve terminal epidermal differentiation in culture as shown by their inability to form cornified envelopes. Even after culture in a serum-free medium (MCDB 153) containing no retinoic acid and a high (10(-3) M) calcium concentration (conditions known to facilitate epidermal differentiation), the cells do not become competent as shown by the fact that subsequent treatment with a calcium ionophore is unable to provoke the formation of cornified envelopes. Nevertheless, A431 cells are able to synthesize the envelope precursor involucrin. The block in formation of cornified envelopes is thus not due to a lack in involucrin. The results described here suggest that the absence of cross-linking of this molecule is due to a lowered epidermal membrane-bound transglutaminase activity in A431 cells when compared to normal human keratinocytes. In other respects, EGF, which inhibits the proliferation of A431 cells, enhances involucrin accumulation in these cells, although in normal human keratinocytes it stimulates growth and reduces involucrin synthesis. These results suggest that involucrin synthesis is triggered by the arrest of growth.