Caenorhabditis elegans lin-3 encodes a homolog of the epidermal growth factor (EGF) family of growth factors. LIN-3 is the inductive signal for hermaphrodite vulval differentiation, and it is required for animal viability, hermaphrodite fertility, and the specification of anterior cell fates in the male B cell lineage. We describe the cloning of a lin-3 homolog from C. briggsae, sequence comparison of C. elegans lin-3 with C. briggsae lin-3, and the determination of molecular lesions in alleles of C. elegans lin-3, including three new alleles. We also analyzed the severity of phenotypes caused by the new and existing alleles of lin-3. Correlation of mutant phenotypes and their molecular lesions, as well as sequence comparison between two species, reveal that the EGF motif and the N-terminal portion of the cytoplasmic domain are important for the functions of LIN-3 in all tissues, while the C-terminal portion of the cytoplasmic domain is involved in the tissue-specific functions of lin-3. We discuss how the structure of lin-3 contributes to its functions in multiple developmental processes.