The cell adhesion molecule E-cadherin is considered to play a crucial role in the establishment and maintenance of epithelial layers, such as those lining organ surfaces. Close contact between adjacent cells is achieved by formation of the E-cadherin-catenins complex that anchors to the actin-based cytoskeleton via α-catenin. The idea that establishment of the density-dependent inhibition of growth, characteristic of normal epithelial cells in culture, requires prevention of the EGF receptor activation by the E-cadherin-catenins complex was suggested based on evidence demonstrating that overgrowth of normal epithelial cells beyond the saturated density is induced by an antibody specific for E-cadherin. Trypsinization of the epithelial monolayers into single cells induced tyrosine phosphorylation and association of β-catenin with the EGF receptor. In the single cells, α-catenin was dissociated from E-cadherin, and the EGF receptor responded to EGF. This suggests that a mutual regulation between E-cadherin and the EGF receptor exists; E-cadherin prevents activation of the EGF receptor by forming a complex with catenins that anchors to the actin-based cytoskeleton at confluence, and the cell adhesive function of E-cadherin is inactivated by the dissociation of actin-associated α-catenin from E-cadherin through the tyrosine phosphorylation of β-catenin by the EGF receptor when cells are grown at low density.