In this study the nature of binding of enhancing factor (EF) and its mode of action are examined. EF binds to A431 cells through its own receptor, which is distinct from the receptor for epidermal growth factor (EGF). EF binds to the cell membrane and in turn provides a binding site for EGF. Data analyzed from Scatchard plots show that prior treatment of formalin-fixed A431 cells with EF for 30 minutes results in an increase in the number of binding sites for 125I-EGF. 3H-Thymidine incorporation studies, using the EGF-receptorless cell line NR-6, indicate that neither EF nor EGF alone stimulates the cells to synthesise DNA, but when both are added together the cells show 3H-thymidine incorporation. The role of EF may be to trap EGF and make it available to the cells through its own receptors even in the absence of EGF receptors. EF also induces anchorage-independent growth of normal fibroblasts in soft agar only in the presence of EGF.