Compound 5 (Cpd 5), a synthetic K vitamin analogue, or 2-(2-mercaptoethanol)-3-methyl-1,4-naphthoquinone, is a potent inhibitor of epidermal growth factor (EGF)-induced rat hepatocyte DNA synthesis and induces EGF receptor (EGFR) tyrosine phosphorylation. To understand the cellular responses to Cpd 5, its effects on the EGF signal transduction pathway were examined and compared to those of the stimulant, EGF. Cpd 5 induced a cellular response program that included the induction of EGFR tyrosine phosphorylation and the activation of the mitogen-activated protein kinase (MAPK) cascade. EGFR tyrosine phosphorylation was induced by Cpd 5 in a time-and dose-dependent manner. Coimmunoprecipitation studies demonstrated that both EGF and Cpd 5 induced tyrosine phosphorylation of EGFR was associated with increased amounts of adapter proteins Shc and Grb2, and the Ras GTP-GDP exchange protein Sos, indicating the formation of functional EGFR complexes. Although EGFR phosphorylation was induced both by the stimulant EGF and the inhibitor Cpd 5, the timing and intensity of activation by EGF and Cpd 5 were different. EGF activated EGFR transiently, whereas Cpd 5 induced an intense and sustained activation. Cpd 5-altered cells had a decreased ability to dephosphorylate tyrosine phosphorylated EGFR, providing evidence for an inhibition of tyrosine phosphatase activity. Both EGF and Cpd 5 caused an induction of phospho-extracellular response kinase (ERK), which was also more sustained with Cpd 5. Moreover, whereas Cpd 5 induced a striking translocation of phosphorylated ERK from cytosol to the nucleus, no significant nuclear translocation occurred after stimulation with EGF. The data suggest that this novel compound causes growth inhibition through antagonism of EGFR phosphatases and consequent induction of EGFR and ERK phosphorylation. This is supported by experiments with PD 153035 and PD 098059, antagonists of phosphorylation of EGFR and MAP kinase kinase (MEK), respectively, which both antagonized Cpd 5-induced phosphorylation and the inhibition of DNA synthesis. These results imply a mechanism of cell growth inhibition associated with intense and prolonged protein tyrosine phosphorylation. Protein tyrosine phosphatases may thus be a novel target for drugs designed to inhibit cell growth.