Purpose: This study was conducted to evaluate the clinical significance of the localization of epidermal growth factor receptor (EGF-r), transforming growth factor (TGF)-ot, and erbB-2 in the development, progression and prognosis of squamous cell cancers (SCCs) of the lung. Experimental Design: The localization of EGF-r, TGF-ot, and erbB-2 was evaluated immunohistochemically in 60 archival specimens of SCC of the lung and in 60 lung specimens without cancer. To clarify the patterns of expression of EGF-r in these tumors, the patterns of expression of EGF-r in cells in culture were monitored after challenging normal human bronchial epithelial and SCC cell lines with either EGF or TGF-ot at physiological concentrations. Results and Conclusions: The expression of EGF-r, erbB-2, and TGF-ot were significantly higher in SCC and associated precancerous lesions than in the normal bronchial epithelium and hyperplastic lesions of noncancer specimens. A statistically significant stepwise increase in expression from uninvolved bronchial epithelium to precancerous lesions to SCC was observed with EGF-r and TGF-ot. The localization of EGF-r in the cytoplasm (P = 0.04), but not in the membrane (P = 0.20), of SCCs was significantly associated with poor overall survival of subjects. To demonstrate the biological relevance of cytoplasmic expression of EGF-r, we noted that there was a prompt reduction in the membrane expression and a concomitant increase in cytoplasmic expression of EGF-r after adding either EGF or TGF-ot to the cell culture medium. Overall, the study identified an involvement of EGF-r and TGF-ot in the development of SCCs. The prognostic importance of EGF-r expression in the cytoplasm of lung cancer probably is an indication of the prognostic importance of trafficking of the EGF-r receptor between the Golgi apparatus and cell membranes and of internalization of EGF-r after an interaction with one of the EGF-r ligands at the cellular membrane surface.