We have investigated coupling between the epidermal growth factor (EGF) receptor and the phospholipase C (PLC)/protein kinase C (PKC) signal-transduction system in normal skin fibroblasts and keratinocytes, for which EGF and transforming growth factor alpha (TGF-alpha) are mitogenic. EGF and TGF-alpha induced a rapid increase in tyrosine phosphorylation of the EGF receptor, in both fibroblasts and keratinocytes, but failed to induce tyrosine phosphorylation of PLC-gamma 1 or detectable phosphoinositide hydrolysis, as measured by two sensitive assays. In fibroblasts, EGF induced phosphatidylcholine (PC) hydrolysis, resulting in increased diacylglycerol (DAG). In contrast, in keratinocytes, there was no detectable PC hydrolysis or elevation of DAG in response to EGF or TGF-alpha. EGF and TGF-alpha activated PKC in fibroblasts, as evidenced by increased phosphorylation of a specific cellular PKC substrate (myristoylated alanine-rich C-kinase substrate, 'MARCKS'). In keratinocytes, TGF-alpha and EGF induced only a modest increase in MARCKS protein phosphorylation. This apparent modest activation of PKC, in the absence of detectable DAG formation, may have been mediated by arachidonic acid, which was released from keratinocytes in response to TGF-alpha, and has been shown to stimulate PKC activity in vitro. These data demonstrate that (1) in dermal fibroblasts and keratinocytes, which express normal levels of EGF receptors, EGF receptor activation is not coupled to tyrosine phosphorylation of PLC-gamma 1 or PtdIns hydrolysis, suggesting that these events are not required for the mitogenic activity of EGF or TGF-alpha in these cells, (2) coupling of EGF receptor to PC hydrolysis is cell-type specific, and (3) in skin fibroblasts, DAG, formed through EGF-induced PC hydrolysis, is capable of activating PKC.