Type beta transforming growth factor (TGF-beta), in combination with epidermal growth factor (EGF) can induce nonneoplastic normal rat kidney cells to express a transformed phenotype and to form colonies in soft agar. Retinoic acid by itself has no effect on colony formation; but at concentrations of 10(-9) M or greater, it can greatly enhance the response of the cells to EGF and TGF-beta, as measured by colony growth in soft agar and expression of a transformed morphology in monolayer culture. Dexamethasone, at concentrations above 10(-9) M, has an opposite effect, inhibiting the TGF-beta-dependent formation of colonies in soft agar and restoring a more normal morphology to the cells. Added simultaneously, these two modulators act antagonistically; at equimolar concentrations, their opposite effects on colony formation are canceled. Retinoic acid and dexamethasone also have opposite and antagonistic effects on the binding of 125I-labeled EGF to normal rat kidney cells. Retinoic acid enhances the binding of EGF up to 6-fold, while dexamethasone reduces the binding to 50 to 60% of control levels. These effects on EGF binding show a dose dependence similar to the effects on colony formation in soft agar and on morphology in monolayer culture. Optimal effects on binding are observed 40 to 60 hr after treatment of the cells. It can be concluded that the abilities of retinoic acid and dexamethasone to alter expression of the transformed phenotype induced by treatment of normal rat kidney cells with TGF-beta and EGF are mediated at least in part through their effects on the EGF receptor.