cDNA analysis has revealed that the 50 amino acid transforming growth factor-alpha (TGF-alpha) is derived from a 160 amino acid precursor. Antibodies to TGF-alpha and to a C-terminal portion of the precursor were used to study the biosynthesis and processing of the precursor. CHO cells transfected with a TGF-alpha expression vector secrete high levels of TGF-alpha; a mixture of species of about 18 kd is secreted in addition to the 50 amino acid form. These larger species are N-glycosylated and are derived from the same precursor as the smaller form. The C-terminal segment of the precursor remains anchored in the membrane and has covalently attached palmitate. The newly synthesized TGF-alpha precursor is thus a transmembrane protein that subsequently undergoes external proteolytic cleavages, releasing several TGF-alpha species.