Ligand dependent activation of receptor tyrosine kinases is mediated by an allosteric dimerization process that is responsible for the stimulation of protein tyrosine kinase activity and receptor autophosphorylation. In order to gain further insight into the processes which control this process, we have generated EGF receptor mutants that contain inserts of 20-40 amino acids in their juxtamembrane regions, on each side of the receptor's single transmembrane domain. An EGF receptor mutant with an insertion on the cytoplasmic side of the transmembrane domain exhibited typical EGF binding characteristics, ligand-dependent tyrosine autophosphorylation, as web as ligand-induced DNA synthesis. However, an EGF receptor mutant with an insertion on both sides of the transmembrane domain was found to be constitutively activated. This mutant also exhibited dramatically reduced EGF binding, but dimerized and had enhanced tyrosine kinase activity even in the absence of ligand. Moreover, NIH3T3 cells expressing this mutant receptor formed colonies in soft agar in the absence of EGF. This represents a novel example of a constitutively activated receptor, and provides further support for receptor dimerization as a mechanism for activation of EGFR and other receptor tyrosine kinases.