The Neu Differentiation Factors (NDFs, also termed "heregulins") are a family of proteins that were first isolated as ligands for the HER2 (ergB2, or p185neu) receptor protein tyrosine kinase. Here we show that NDF acts to stimulate the proliferation and alter the cellular morphology of colonic epithelial cells in culture. Dramatic NDF-induced changes in cellular morphology were noted in the colonic epithelial cell line, LIM 1215. In addition, the expression of specific cell proteins, such as carcinoembryonic antigen and integrin beta 4, was induced in LIM 1215 cells by NDF. These effects were more pronounced with the beta isoform than with the alpha isoform of NDF. The EGF-homology domain of NDF beta was sufficient to stimulate the proliferation and alteration in cell morphology. The use of chemically synthesized chimeric NDF alpha and NDF beta proteins enabled use to identify a region of seven amino acids in the EGF-homology domain of NDF beta that is required for both activities. These in vitro experiments suggest that NDF may act as a regulator of growth and differentiation of colonic epithelial cells in vivo.