Previous work identified a protein kinase activity that phosphorylates the epidermal growth factor (EGF) receptor at Thr669. An assay for this protein kinase activity present in homogenates prepared from A431 human epidermoid carcinoma cells was developed using a synthetic peptide substrate corresponding to residues 663-681 of the EGF receptor (peptide T669). Here we report that a greater initial rate of T669 phosphorylation was observed in experiments using homogenates prepared from EGF- or phorbol ester-treated cells compared with control cells. EGF and 4 beta-phorbol 12-myristate 13-acetate (PMA) caused a 6-fold and a 2-fold increase in protein kinase activity, respectively. A kinetic analysis of T669 phosphorylation demonstrated that the increase in protein kinase activity observed was accounted for by an increase in Vmax. To examine the interaction between protein kinase C and signal transduction by the EGF receptor, the effect of pretreatment of cells with PMA on the subsequent response to EGF was investigated. Treatment of cells with PMA caused greater than 90% inhibition of the EGF-stimulated tyrosine phosphorylation of the EGF receptor and abolished the EGF-stimulated formation of soluble inositol phosphates. In contrast, PMA was not observed to inhibit the stimulation of T669 protein kinase activity caused by EGF. Thus, the apparent functional desensitization of the EGF receptor caused by PMA does not inhibit signal transduction mediated by the T669 protein kinase. Our results demonstrate that EGF receptor transmodulation alters the pattern of signal-transduction pathways that are utilized by the EGF receptor.