In the adult mouse, epidermal growth factor (EGF) is synthesized in granular convoluted tubule (intralobular) duct cells of the submandibular gland and in distal tubule cells of the kidney. The presence of EGF in developing tissues and maternal milk and the localization of EGF receptors in developing tissues suggest a role for EGF in developmental processes. The primary aims of the present study were to: (1) localize EGF and EGF-binding sites in the kidney and submandibular gland during neonatal development and (2) to determine the effect of exogenously administered EGF on cell proliferation in these two developing organs. In the present study, EGF was localized by immunocytochemistry in granular convoluted tubule cells of the submandibular gland initially on day 21 after birth and in distal tubule cells of the kidney on postnatal day 6. EGF binding in the kidney decreased after birth with some localization to the glomerulus. In submandibular glands of newborn and 10-day-old mice, EGF-binding sites were associated with both acinar and duct cells with peak binding at 10 days postnatally. Submandibular glands from 20-day-old mice demonstrated primarily ductal EGF-binding sites. Exogenously administered EGF induced a mitogenic response in acinar and interlobular duct cells of submandibular glands during the first week after birth. EGF treatment during this period had an inhibitory effect on 3H-thymidine incorporation into cellular compartments in the developing kidney. The identification of EGF-binding sites in the kidney and submandibular gland before the presence of EGF suggests that an EGF-like molecule such as transforming growth factor alpha (TGF-alpha) may be present as a potential ligand in these organs. In order to assess this possibility, developing kidneys and submandibular glands were stained with anti-TGF-alpha. These immunocytochemical studies localized TGF-alpha to the proximal tubule of the kidney and immature acinar cells of the newborn mouse. Our data strongly support an autocrine, juxtacrine or paracrine role for EGF and/or TGF-alpha in the regulation of cell proliferation and cytodifferentiation in the kidney and submandibular gland.