Analysis of a cDNA clone derived from retrovirus-transformed rat fibroblasts has recently suggested that the mature 50-amino-acid form of transforming growth factor alpha (TGF alpha) is derived from a 159-amino-acid transmembrane precursor by proteolytic cleavage. To understand the processing of the TGF alpha precursor molecule in more detail, we have expressed this protein in baby hamster kidney (BHK) fibroblasts under control of the metal-ion-inducible metallothionein promoter and characterized the expressed precursor with site-specific antipeptide antibodies. One of the BHK transfectants, termed 5:2, expressed the TGF alpha mRNA in a cadmium- and zinc-inducible manner. The TGF alpha precursor protein was detected by immunoprecipitation analysis of radiolabeled cell cultures. In the induced 5:2 cells, a polypeptide of Mr 13,000 to 17,000 was readily identified by peptide antisera made to three different regions of the TGF alpha precursor protein. No such protein species were observed in BHK cells treated with cadmium and zinc or in uninduced 5:2 cells. However, two cell lines known to produce TGF alpha naturally, Leydig testicular tumor cells and Snyder-Theilan feline sarcoma virus-transformed Fisher rat embryo fibroblasts, possessed detectable levels of immunologically related Mr 13,000 to 17,000 proteins. Cell fractionation studies indicate that the Mr 13,000 to 17,000 species expressed in induced 5:2 cells is membrane associated, consistent with predictions based on the cDNA sequence of the TGF alpha precursor. Media conditioned by induced 5:2 cells contained epidermal growth factor receptor-competing activity, which, upon size fractionation, was similar in size to the mature processed form of TGF alpha. These data show that these nontransformed BHK cells possess the ability to process the TGF alpha precursor molecule into its native form.