Mice harboring the waved-1 {wa-1) and waved-2 {wa-2) mutations exhibit skin and eye abnormalities that are strikingly similar to those of TGF-a-deficient mice, and wa-1 and TGF-a were recently shown to be allelic. Because the wa-2 mutation was mapped previously to the vicinity of the EGF/TGF-a receptor (EGFR) gene on mouse chromosome 11, we hypothesized that the wa-2 phenotype might result from a defect in either the expression or activity of EGFR, or both. In the present report, we show that EGFR mRNA and protein of normal size are expressed in wa-2 liver and skin at levels that are comparable to those in the corresponding normal tissues, and that the ability of wa-2 EGFR to bind ligand is unaltered. However, ligand-dependent autophosphorylation of wa-2 EGFR is diminished 5-to 10-fold in vitro, and the ability of wa-2 EGFR to phosphorylate an exogenous substrate is reduced by >90% compared with that of the control receptor. EGF-induced tyrosine phosphorylation, including that of EGFR itself, is also diminished in skin, particularly at lower doses of exogenous EGF. To establish the nature of the wa-2 mutation, we determined the nucleotide sequence of the coding region of normal and wa-2 murine EGFR cDNAs. A comparison of these sequences revealed a single-nucleotide transversion resulting in the substitution of a glycine for a conserved valine residue near the amino terminus of the tyrosine kinase domain. The importance of this mutation was confirmed by showing that its introduction into an otherwise normal EGFR markedly reduced the receptor's tyrosine kinase activity in transfected Chinese hamster ovary cells. Finally, in situ hybridization analysis demonstrated expression of EGFR predominantly in the outer root sheath of active hair follicles in neonatal mice. As we previously localized TGF-a mRNA to the inner root sheath, this pattern of EGFR expression is consistent with the effect of the wa-2 mutation on hair structure, and together with our previous characterization of TGF-a-deficient mice, reveals a critical role for signaling by this ligand/receptor system in skin.[Key Words: EGF receptor; mutation; tyrosine kinase; in sitU; hair follicle] Received October 12, 1993; revised version accepted January 6, 1994. A range of cellular activities, including proliferation, migration, and differentiation, are controlled by signal transduction systems that are activated by the binding of polypeptide growth factors to cell-surface receptors. The majority of these receptors consist of an extracellular ligand-binding domain linked to a cytoplasmic sequence with intrinsic protein kinase activity that is specific for tyrosine residues (for review, see Ullrich and Schlessinger 1990; also see Carpenter and Wahl 1990). One of the better characterized tyrosine kinase receptors is the epidermal growth factor receptor (EGFR), a 170-kD integral membrane glycoprotein. The extracellular domain of EGFR includes two cysteine-rich regions. The intraConesponding author. cellular domain comprises a juxtamembrane region containing si...