The interrelationship between cell proliferation and terminal myogenic differentiation has been analyzed by studying a differentiation-defective subclone (DD-1) of the permanent mouse myoblast line MM14. Parental MM14 myoblasts withdraw irreversibly from the cell cycle and initiate terminal differentiation when they are deprived of certain mitogens. In contrast, DD-1 cells become quiescent in a mitogen-depleted environment and less than 0.4% of the cells differentiate. When refed with mitogen-rich medium quiescent DD-1 cells resume proliferation. Expression of this differentiation-defective phenotype is apparently coupled to an alteration in mitogen sensitivity: MM14 myoblasts require horse serum plus either chick embryo extract or fibroblast growth factor (FGF) to sustain cell growth: DD-1 variants are responsive to FGF, but also proliferate in response to serum alone or to reduced serum plus epidermal growth factor (EGF). Interestingly, EGF also appears to retard DD-1 cell differentiation in a manner similar to the FGF repression of differentiation in normal myoblasts. Normal and differentiation-defective myoblasts which have been maintained under growth-promoting conditions exhibit similar EGF binding, internalization, and degradation. However, whereas the EGF binding capacity of MM14 myoblasts declines to less than 5% of its initial level within 24 hr of FGF removal, DD-1 variants exhibit an increase in EGF binding when switched to an FGF-depleted medium. The relationship of altered EGF receptor regulation to changes in mitogen sensitivity and differentiation capacity of the DD-1 variant is discussed, and implications for general in vivo processes governing cell proliferation and differentiation are considered.