Retinoic acid (RA) and epidermal growth factor (EGF) regulate growth and differentiation of epithelial cells. RA has both direct and indirect effects on gene expression. Direct effects result from modulation of the transcriptional activity of genes, which contain RA response elements (RARE) recognized by trans-acting nuclear RA receptors (RARs). A second indirect mechanism for the modulatory effects of RA is by the induction or repression of growth factors and growth factor receptors. There is evidence for functional interactions between RA and the EGF receptor (EGFR). RA enhances the proliferative response of cultured keratinocytes to EGF, increases the number of EGFRs on the surface of some cells, and induces EGFR promoter activity in most cells. In contrast, immunoprecipitation, Northern blot, and nuclear run-on analysis described in this paper show that RA suppresses EGFR synthesis at the transcriptional level in human epidermoid carcinoma ME180 cells. Deletion analysis of EGFR gene promoter mutants linked to the chloramphenicol acetyltransferase gene revealed the existence of a region of the promoter, -771 to -384, which is responsive to RA. Gel retardation data indicated that a cell-type nuclear protein which binds to this novel element is suppressed by RA in a dose-dependent manner. This decrease coincides with a decreased steady-state level of RAR-gamma mRNA. These data strongly suggest that the EGFR promoter is regulated by RAR-gamma, which itself is under the control of RA. Other cell-specific trans-acting factors may be involved in this regulation.