The binding of EGF induces dimerization of its receptor, leading to the stimulation of its intracellular tyrosine kinase activity. Kinase activation occurs within the context of an asymmetric dimer in which one kinase domain serves as the activator for the other kinase domain but is not itself activated. How ligand binding is related to the formation and dynamics of this asymmetric dimer is not known. The binding of EGF to its receptor is negatively cooperative - that is, EGF binds with lower affinity to the second site on the dimer than to the first site on the dimer. In this study, we analyzed the binding of 125I-EGF to a series of EGF receptor mutants in the intracellular juxtamembrane domain and demonstrate that the most membrane-proximal portion of this region plays a significant role in the genesis of negative cooperativity in the EGF receptor. The data are consistent with a model in which the binding of EGF to the first site on the dimer induces the formation of one asymmetric kinase dimer. The binding of EGF to the second site is required to disrupt the initial asymmetric dimer and allow the formation of the reciprocal asymmetric dimer. Thus, some of the energy of binding to the second site is used to reorient the first asymmetric dimer, leading to a lower binding affinity and the observed negative cooperativity.