A biologically active form of the epidermal growth factor (EGF) precursor has been detected in human fluids and secretions. The secreted protein identified in human urine and milk has an apparent molecular mass of 160-170 kilodaltons and exhibits an affinity for the glycosaminoglycan heparin. More importantly, the secreted EGF precursor is capable of activating the intrinsic tyrosyl kinase activity of the EGF receptor. Our results demonstrate that the soluble form of the precursor is generated from the membrane-anchored form by a processing step that takes place at the cell surface and involves truncation of the cytoplasmic and transmembrane domains of the intact EGF precursor. The findings support the hypothesis that the secreted 160- to 170-kilodalton EGF glycoprotein that accumulates in urine and milk is proteolytically derived from the plasma membrane-spanning precursor expressed in the kidney and mammary gland.