A sarcomatoid cholangiocarcinoma cell line, ETK-1, was established from a patient. Phenotypically, the cells corresponded to immature biliary epithelial cells. Because a small number of ETK-1 cells appeared to differentiate spontaneously along a biliary epithelial lineage in continuous culture, we examined the factors that initiate and/or promote the differentiation of the cells. Transforming growth factor-alpha (TGFalpha) induced significant changes in ETK-1 cells. After stimulation with the factor, ETK-1 cells displayed morphologic transformation at a much higher frequency, with the appearance of many large cells with intracytoplasmic vacuoles, and the production of mucinous substances. These morphologically transformed cells were phenotypically similar to well-differentiated adenocarcinoma cells. The expression pattern of integrins after TGFalpha treatment also supported the maturation of the ETK-1 cells. The antibody against the receptor of TGFalpha inhibited these changes by TGFalpha. Moreover, the proliferation rate of ETK-1 cells was suppressed by TGFalpha. Our data suggest that TGFalpha can act as a differentiation factor along a biliary epithelial lineage.