We have shown previously that the muscarinic agonist, carbachol (CCh), transactivates the epidermal growth factor receptor (EGFr) via calmodulin, Pyk-2, and Src kinase activation. EGFr phosphorylation causes extracellular signal-regulated kinase (ERK) activation and inhibits CCh-stimulated chloride secretion across intestinal epithelial cells. Here we investigated whether CCh-stimulated EGFr transactivation involves EGFr ligand release. Pre-incubation of T(84) cell monolayers with a neutralizing antibody to the EGFr ligand binding domain decreased CCh-induced phosphorylation of EGFr and ERK. CCh-stimulated efflux of (86)Rb+ from T(84) cell monolayers, which parallels changes in chloride secretion, was potentiated by anti-EGFr pre-incubation. Anti-EGFr did not reduce CCh-stimulated Pyk-2 phosphorylation. Co-incubation with the Src kinase inhibitor PP2 and anti-EGFr had an additive inhibitory effect on CCh-induced ERK phosphorylation greater than either inhibitor alone. CCh caused the basolateral release of transforming growth factor alpha (TGF-alpha) into T(84) cell bathing media. A metalloproteinase inhibitor, WAY171318, reduced CCh-induced phosphorylation of ERK and completely blocked EGFr phosphorylation and TGF-alpha release. We conclude that CCh-stimulated EGFr transactivation and subsequent ERK activation, a pathway that limits CCh-induced chloride secretion, is mediated by metalloproteinase-dependent extracellular release of TGF-alpha and intracellular Src activation. These findings have important implications for our understanding of the role of growth factors in regulating epithelial ion secretion.