Cripto-1 (CR-1) is a recently discovered protein of the epidermal growth factor family that does not directly activate any of the known erbB type 1 tyrosine kinase receptors. Also, CR-1 stimulates the growth of HC-11 mouse mammary epithelial cells. We found that prior treatment of HC-11 cells with exogenous CR-1 induced a competency response to the lactogenic hormones dexamethasone, insulin, and prolactin (DIP) with respect to the induction of the milk protein beta-casein. In contrast, simultaneous treatment of mouse HC-11 cells with CR-1 in the presence of DIP inhibited beta-casein expression. The inhibitory effects of CR-1 on beta-casein expression in response to DIP were not unique to this mouse mammary epithelial cell line, because beta-casein and whey acidic protein expression in primary mouse mammary explant cultures established from midpregnant mice were also differentially inhibited by several epidermal growth factor-related peptides including CR-1. The mitogenic and differentiation effects of CR-1 are mediated by the binding of CR-1 to a cell surface receptor that is known to activate the ras/raf/mitogen-activated protein kinase (MAPK)/MAPK kinase pathway. The inhibitory response of CR-1 in HC-11 cells on beta-casein expression after treatment with DIP can be attenuated by B581, a peptidomimetic farnesyltransferase inhibitor that blocks p21ras farnesylation and activation, and by the phosphatidylinositol 3'-kinase (PI3k) inhibitor LY 294002 but not by PD 98059, a MAPK kinase inhibitor that blocks MAPK activation. These data suggest that the ability of CR-1 to block lactogenic hormone-induced expression of beta-casein is mediated through a p21ras-dependent, PI3k-mediated pathway. This is further substantiated by the observation that CR-1 is able to stimulate the tyrosine phosphorylation of the p85 PI3k regulatory subunit and to increase the activity of PI3k in HC-11 cells.