GRP78/BiP, a molecular chaperone in the endoplasmic reticulum, is induced under such adverse conditions for cell survival as glucose starvation. Induction of GRP78 has been shown to coincide with G1 cell cycle arrest, which is an important cellular defense system. In this study, we investigated involvement of GRP78 in the mechanism of growth arrest by using human epidermoid carcinoma A431 cells. Under a chemical stress condition with 2-deoxyglucose, GRP78 was induced 3-4-fold. In the stressed cells, an underglycosylated form of epidermal growth factor receptor (EGFR) was produced and the mature form was decreased. We found that the molecular chaperone GRP78 in the endoplasmic reticulum formed a stable complex with the underglycosylated EGFR but did not with the mature form. This complex formation occurred specifically under the stress conditions, and the complex was dissociated upon removal of the stress. Treatment of the GRP78-underglycosylated EGFR complex with ATP resulted in a release of the underglycosylated EGFR from GRP78, indicating that the complex could be formed through the chaperone function of GRP78. In accordance with the complex formation with endoplasmic reticulum-resident GRP78, the underglycosylated EGFR could not be translocated to the cell surface. As a result, EGF could not induce expression of cyclin D3, a G1 cyclin, in the stressed cells, whereas it did in non-stressed cells. These results indicated that, in the stressed cells, GRP78 participated in down-regulation of EGF-signaling pathway by forming a stable complex with EGFR and inhibiting EGFR translocation to the cell surface.