Transforming growth factors (TGFs) are mitogenic polypeptides produced most conspicuously by transformed cells and conferring on normal cells several phenotypic alterations associated with transformation. TGFs comprise two distinct sets of molecules: TGF-alpha s are structurally similar to epidermal growth factor (EGF), binding to and inducing the tyrosine phosphorylation of the EGF receptor in a manner indistinguishable from that of EGF. In addition, the 50-amino acid rat TGF-alpha has 33 and 44% homologies with mouse and human EGFs, respectively, and shares with EGFs a conserved pattern of three disulphide bridges. Thus, it has been proposed that TGF-alpha s belong to a family of EGF-like polypeptides. TGF-beta s, on the other hand, display no measurable binding to EGF receptors, but potentiate the growth-stimulating activities of TGF-alpha. Here we report the isolation of a complementary DNA clone encoding rat TGF-alpha. This cDNA hybridizes to a 4.5-kilobase (kb) messenger RNA that is 30 times larger than necessary to code for a 50-amino acid polypeptide and is present not only in retrovirus-transformed rat cells but also at lower levels in normal rat tissues. The nucleotide sequence of the cDNA predicts that TGF-alpha is synthesized as a larger product and that the larger form may exist as a transmembrane protein. However, unlike many polypeptide hormones (including EGF), cleavage of the 50-amino acid TGF-alpha from the larger form does not occur at paired basic residues, but rather between alanine and valine residues, suggesting the role of a novel protease.