Members of the cytokine receptor superfamily have structurally similar extracellular ligand-binding domains yet diverse cytoplasmic regions lacking any obvious catalytic domains. Many of these receptors form ligand-induced oligomers which are likely to participate in transmembrane signaling. A constitutively active (factor-independent) mutant of the erythropoietin receptor (EPO-R), R129C in the exoplasmic domain, forms disulfide-linked homodimers, suggesting that the wild-type EPO-R is activated by ligand-induced homodimerization. Here, we have taken two approaches to probe the role EPO-R dimerization plays in signal transduction. First, on the basis of the crystal structure of the ligand-bound, homodimeric growth hormone receptor (GH-R) and sequence alignment between the GH-R and EPO-R, we identified residues of the EPO-R which may be involved in intersubunit contacts in an EPO-R homodimer. Residue 129 of the EPO-R corresponds to a residue localized to the GH-R dimer interface region. Alanine or cysteine substitutions were introduced at four other residues of the EPO-R predicted to be in the dimer interface region. Substitution of residue E-132 or E-133 with cysteine renders the EPO-R constitutively active. Like the arginine-to-cysteine mutation at position 129 in the exoplasmic domain (R129C), E132C and E133C form disulfide-linked homodimers, suggesting that constitutive activity is due to covalent dimerization. In the second approach, we have coexpressed the wild-type EPO-R with inactive mutants of the receptor missing all or part of the cytosolic domain. These truncated receptors have a dominant inhibitoiy effect on the proliferative action of the wild-type receptor. Taken together, these results strengthen the hypothesis that an initial step in EPO-and EPO-R-mediated signal transduction is ligand-induced receptor dimerization.