Palytoxin, a non-12-O-tetradecanoylphorbol-13-acetate type tumor promoter, has been shown to inhibit epidermal growth factor (EGF) binding to both high and low affinity receptors through a protein kinase C-independent pathway. In the present paper, we have investigated the mechanism of palytoxin action in Swiss 3T3 cells. Two lines of evidence indicate that calcium is not required for palytoxin activity. First, palytoxin can induce the loss of EGF binding sites in the absence of external calcium. Second, studies with the photosensitive protein aequorin indicate that palytoxin does not cause the influx of external calcium or the release of calcium from internal stores under the conditions used in these studies. However, palytoxin action does appear to be dependent upon the presence of sodium. When extracellular sodium is replaced by either choline, Tris, or sucrose, palytoxin is unable to decrease EGF binding to either high or low affinity receptors. Studies of sodium influx indicate that palytoxin induces rapid sodium uptake and that the rate of sodium uptake is dose-dependent. Furthermore, there appears to be a direct correspondence between the extent of inhibition of EGF binding by palytoxin and the rate of sodium uptake. Finally, the palytoxin-induced inhibition of EGF binding can be mimicked by monensin, a sodium ionophore. The specificity of this sodium dependence was tested by substituting lithium, potassium, or cesium for sodium. Although lithium is an effective substitute for sodium, palytoxin can no longer inhibit EGF binding when sodium is replaced by either potassium or cesium. Marked inhibition of palytoxin action is also obtained when 5.4 mM potassium or 5.4 mM cesium are added to the sodium-containing medium. These studies suggest that palytoxin is able to down-modulate the EGF receptor through a novel mechanism involving the activation or formation of a sodium pump or channel.