By fractionating conditioned medium (CM) from Drosophila imaginal disc cell cultures, we have identified a family of Imaginal Disc Growth Factors (IDGFs), which are the first polypeptide growth factors to be reported from invertebrates. The active fraction from CM, as well as recombinant IDGFs, cooperate with insulin to stimulate the proliferation, polarization and motility of imaginal disc cells. The IDGF family in Drosophila includes at least five members, three of which are encoded by three genes in a tight cluster. The proteins are structurally related to chitinases, but they show an amino acid substitution that is known to abrogate catalytic activity. It therefore seems likely that they have evolved from chitinases but acquired a new growth-promoting function. The IDGF genes are expressed most strongly in the embryonic yolk cells and in the fat body of the embryo and larva. The predicted molecular structure, expression patterns, and mitogenic activity of these proteins suggest that they are secreted and transported to target tissues via the hemolymph. However, the genes are also expressed in embryonic epithelia in association with invagination movements, so the proteins may have local as well as systemic functions. Similar proteins are found in mammals and may constitute a novel class of growth factors.