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Proliferation of some cultured human tumor cell lines bearing high numbers of epidermal growth factor (EGF) receptors is paradoxically inhibited by EGF in nanomolar concentrations. In the present study, we have investigated the biochemical mechanism of growth inhibition in A431 human squamous carcinoma cells exposed to exogenous EGF. In parallel, we studied a selected subpopulation, A431-F, which is resistant to EGF-mediated growth inhibition. We observed a marked reduction in cyclin-dependent kinase-2 (CDK2) activity when A431 and A431-F cells were cultured with 20 nM EGF for 4 h. After further continuous exposure of A431 cells to EGF, the CDK2 activity remained at a low level and was accompanied by persistent G1 arrest. In contrast, the early reduced CDK2 activity and G1 accumulation in A431-F cells was only transient. We found that, at early time points (4-8 h), EGF induces p21Cip1/WAF1 mRNA and protein expression in both EGF-sensitive A431 cells and EGF-resistant A431-F cells. But only in A431 cells, was p21Cip1/WAF1 expression sustained at a significantly increased level for up to 5 d after addition of EGF. Induction of p21Cip1/WAF1 by EGF could be inhibited by a specific EGF receptor tyrosine kinase inhibitor, tyrphostin AG1478, suggesting that p21Cip1/WAF1 induction was a consequence of receptor tyrosine kinase activation by EGF. We also demonstrated that the increased p21Cip1/WAF1 was associated with both CDK2 and proliferating cell nuclear antigen (PCNA). Taken together, our results demonstrate that p21Cip1/WAF1 is an important mediator of EGF-induced G1 arrest and growth inhibition in A431 cells.