Active psoriatic lesions have increased EGF/TGF alpha receptors, historically known as the EGF-R. This increase is due to their persistence into the outer parakeratotic layers as measured by autoradiography, immunohistochemistry, and mRNA assays. When psoriatic lesions in patients resolve due to therapy with different modalities, the EGF-R persistently expressed in the outer layers of the epidermis either disappear or resume a basal location presumably due to receptor downregulation. To test whether EGF could downregulate EGF-R and biologically affect psoriatic epidermis, split-thickness skin grafts of active psoriatic lesions were sutured onto the dorsal surface of nude mice. After 3 weeks, the mice were treated daily for a 6-week period with placebo, or 10 or 50 micrograms/ml EGF. Immunostaining showed persistent EGF-R in all epidermal layers in the untreated, placebo-, and 10 micrograms/ml EGF-treated groups. Those grafts receiving a high dose of EGF (50 micrograms/ml) showed either no immunoreactive EGF-R or faint basilar staining. As an additional check for functional activity of the EGF-R, an abundant substrate for this receptor, PLC-gamma 1 was also evaluated following EGF treatment. A similar distribution and modulation pattern following treatment were observed in the grafts immunostained for PLC-gamma 1, suggesting that exogenous EGF treatment affected metabolic pathways subsequent to ligand receptor binding. Morphologic alterations characteristic of a regressing psoriatic phenotype (a decrease in acanthosis, thickness, and the resumption of the orthokeratotic mode of differentiation) were noted in those lesions receiving the 50 micrograms/ml EGF treatment. This study indicates that persistent EGF-R in psoriasis vulgaris are biologically active in vivo and may serve a pivotal role in the regulation of psoriatic lesions.