Epidermal growth factor (EGF) and transforming growth factor alpha (TGF alpha) elicit quantitatively different cell proliferation responses even though they act via a common receptor, the epidermal growth factor receptor (EGFR). We hypothesized that differential cellular trafficking of available ligand is responsible for the different mitogenic responses elicited by EGF and TGF alpha. Mitogenesis and ligand depletion were determined simultaneously in NR6 mouse fibroblasts expressing either wild-type (WT) or internalization-deficient cytoplasmic domain-truncated (c'973) EGFR. Thus we could determine the effects of both ligand-induced and low level constitutive ligand/receptor processing. For a given initial amount of growth factor, TGF alpha is a weaker stimulus than EGF in cells expressing either form of the EGFR. This difference in the mitogenic potencies correlates with increased depletion of TGF alpha observed during the growth assays. When this difference in ligand depletion is accounted for, or minimized, EGF and TGF alpha elicit quantitatively similar growth responses. Therefore, the relative mitogenic potencies of EGF and TGF alpha depend on ligand availability, as determined by the cellular trafficking of these ligands in conjunction with environmental circumstances. Interestingly, our data demonstrate that TGF alpha can be a less potent mitogenic stimulus than EGF under conditions where ligand availability is limited. Further, in our assays, differences in ligand processing are sufficient to explain the different mitogenic potencies of these growth factors in either of the receptor trafficking scenarios. Our results suggest a model of regulation of hormone responsiveness which favors dissociative ligands (such as TGF alpha) in receptor-limited situations and non-dissociative ligands (such as EGF) in the face of high receptor levels.