Epidermal growth factor (EGF) receptor RNA has been shown to be localized around nucleoli in the nucleus of A431 cells (Sibon et al., Histochemistry 101, 223-232 (1994)). Here we have studied the functional implication of this localization. Inhibition of transcription by alpha-amanitin did not influence the localization and amount of EGF-receptor RNA around the nucleolus, indicating that these RNAs represent mainly completed transcripts. Localization of the EGF-receptor genes in A431 cells by in situ hybridization revealed that the majority of the receptor gene clusters are located at the periphery of the nucleus. Next to this virtually all cells studied contain at least one gene cluster in the vicinity of the nucleolus. From these data, it is tempting to suggest that EGF-receptor gene transcription occurs around the nucleolus. In order to obtain information on the site of EGF-receptor RNA splicing, the localization of exon and intron sequences of the EGF-receptor transcripts was studied using a new electron microscopical approach. These labeling studies revealed that both intron and exon sequences were present at the same site around the nucleolus. In addition, exon sequences were also located, around nucleolus separate from intron sequences. All together, these studies suggest that transcription and splicing of the EGF-receptor transcript occurs at the same defined site around the nucleolus in A431 cells.