Retrovirus-transformed rat cells that actively express transforming growth factor type alpha (TGF-alpha) release into the medium a soluble protein of 17-19 kDa that has been identified as a precursor for TGF-alpha. The identification of this protein as a TGF-alpha precursor is based on its recognition by specific antibodies and by the ability of elastase to convert this protein into a 6-kDa polypeptide with the properties of mature TGF-alpha. This TGF-alpha precursor binds to epidermal growth factor/TGF-alpha receptors and activates the receptor-associated tyrosine kinase activity in intact cells. The biological potency of this precursor is not markedly increased by conversion into mature TGF-alpha in vitro. These studies demonstrate the ability of transformed cells to release a TGF-alpha precursor capable of strong mitogenic action in vivo.