The rat neu gene, which encodes a protein closely related to the epidermal growth factor receptor, is a proto-oncogene that can be converted into an oncogene by a point mutation. Both genes encode proteins with a relative molecular mass of 185,000 but the question of why the neu gene product, p185neu, is oncogenic, whereas the product of c-neu, p185c-neu, is not, remains unanswered. The proteins have several features common to the family of tyrosine kinase growth-factor receptors, including cysteine-rich external domains, a hydrophobic transmembrane region and a cytoplasmic tyrosine kinase domain. The oncogenic p185neu differs from p185c-neu by an amino-acid substitution in the transmembrane region of the glycoprotein: this replacement of valine by glutamic acid at position 664 induces increased intrinsic tyrosine kinase activity which is associated with transformation. Many glycoproteins with charged amino acids in the transmembrane region exist as multimeric complexes at the plasma membrane. We have therefore investigated the association state of both products of the neu gene and show that the oncoprotein p185neu is organized at the plasma membrane primarily in an aggregated form, but that p185c-neu is not. Induction of an aggregated state may mimic aspects of ligand-induced receptor aggregation resulting in enzymatic activation that leads to cellular transformation.