new differentiation factor (NDF), also known as heregulin, is structurally related to the epidermal growth factor family of growth factors; it stimulates tyrosine phosphorylation of the neu/HER-2 oncogene and causes differentiation of certain human breast cancer cell lines. Alternative splicing of a single gene gives rise to multiple isoforms of NDF/heregulin, as well as the neuronal homologues, designated ARIA (acetylcholine receptor inducing activity) and GGF (glial growth factor); at least 15 structural variants are known. All but two of the NDF/heregulin cDNAs are predicted to encode transmembrane, glycosylated precursors of soluble NDF. In this report we characterized the biosynthetic processing of different NDF isoforms in stably transfected Chinese hamster ovary cells expressing individual NDF isoforms, and in the native cell line Rat 1-EJ, which expresses at least six different NDF isoforms. We found that the precursors for NDF undergo typical glycosylation and trafficking. A portion of the molecules are proteolytically cleaved intracellularly leading to the constitutive secretion of soluble, mature NDF into the culture media. However, a significant portion of the newly synthesized NDF precursor molecules escape intracellular cleavage and are transported to the cell surface of both transfected and native cells, where they reside as full-length, transmembrane proteins. Finally we show that these full-length, transmembrane NDF molecules can undergo phorbol ester regulated cleavage from the membrane, releasing the soluble growth factor into the medium.