High levels of epidermal growth factor (EGF) are excreted in the urine and high levels of mRNA for the EGF-precursor have been demonstrated in the kidney. The EGF-precursor is a membrane bound peptide in the kidney, but little is known about the renal processing of the precursor. The present study shows that the membrane fraction of homogenized rat kidney contains an enzyme that releases immuno and receptor reactive EGF from the kidney membranes when incubated at 37 degrees C. Gel filtration shows that the EGF reactivity released from the membranes is similar to the EGF reactivity in rat urine. The EGF releasing enzyme is inhibited by the serine proteinase inhibitor aprotinin and by low temperatures (4 degrees C). The pH optimum of the reaction is pH 7.5-8.0.