Previous studies have reported that the proliferation of A431 cells, a human squamous cell carcinoma cell line, was stimulated by picomolar epidermal growth factor (EGF) but inhibited by nanomolar EGF. This biphasic dose-response phenomenon is not observed in normal human epithelial cells where nanomolar EGF is usually rnitogenic. We have examined the effects of inhibitory and stimulatory concentrations of EGF on the growth and differentiation of A431 cells. In the presence of 100 pM EGF, A431 cells showed a mild increase in growth rate (1 29% of control) compared to cells grown in the absence of EGF. At 10 nM EGF, growth inhibition to 63% of control was observed. EGF at 10 nM stimulates a twofold increase both in cornified envelope formation and in epidermal transglutaminase activity, suggesting that high concentrations of EGF induce terminal differentiation in A431 cells. Mitogenic concentrations of EGF (100 pM) had no significant effect on these differentiation markers. Chronic exposure of A431 cells to 20 or 50 nM EGF resulted in EGF-resistant A431 variants that are neither growth arrested nor induced to terminally differentiate by 10 nM EGF. Removal of EGF from the growth medium of the EGF-resistant cells resulted in the reversion of these cells back to the wild-type A431 biphasic response pattern within 2 weeks. Our results suggest that A431 cells have the capacity to non-mutatively alter their response oattern to EGF in vitro to maintain themselves in a state of optimum proliferation and away from terminal differentiation.