The epidermal growth factor (EGF) receptor is a plasma membrane glycoprotein. It contains four distinct segments: an N-terminal EGF binding domain which is exposed at the cell surface; a short transmembrane segment; a cytoplasmic domain with protein-tyrosine kinase activity; and a C-terminal regulatory segment. Binding of EGF to the external domain of the receptor activates the protein-tyrosine kinase activity of the receptor, and this elevated kinase activity is presumed to be involved in the activation of cell growth. The v-erbB transforming gene of avian erythroblastosis virus is derived, by retroviral transduction, from the gene (c-erbB) which encodes the avian EGF receptor. The transforming capacity of v-erbB appears to result from truncation of the receptor. In erythroid cells, truncation of the N-terminal ligand binding domain is sufficient for transformation, whereas in fibroblasts removal of an additional C-terminal segment is required for transformation. The EGF receptor is subject to complex regulatory controls, including ligand activation, downregulation by internalization, autophosphorylation and autoregulation and transmodulation involving phosphorylation by kinase C. This review is centered around the hypothesis that the transforming capacity of the truncated v-erbB gene product results from a loss in sensitivity to regulators and the consequent activation of protein kinase activity.