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The let-23 gene encodes a Caenorhabditis elegans homolog of the epidermal growth factor receptor (EGFR) necessary for vulval development. We have characterized a mutation of let-23 that activates the receptor and downstream signal transduction, leading to excess vulval differentiation. This mutation alters a conserved cysteine residue in the extracellular domain and is the first such point mutation in the EGFR subfamily of tyrosine kinases. Mutation of a different cysteine in the same subdomain causes a strong loss-of- function phenotype, suggesting that cysteines in this region are important for function and nonequivalent. Vulval precursor cells can generate either of two subsets of vulval cells (distinct fates) in response to sa62 activity. The fates produced depended on the copy number of the mutation, suggesting that quantitative differences in receptor activity influence the decision between these two fates.