Epidermal growth factor receptor-1 (EGFR-1/HER-1/ErbB-1) regulates proliferation and cell fate during epidermal development. HER-1 is activated by several EGF-family ligands including heparin-binding epidermal growth factor-like growth factor (HB-EGF), a mitogenic and chemotactic molecule that participates in tissue repair, tumor growth, and other tissue-modeling phenomena, such as angiogenesis and fibrogenesis. We found that mesenchymal stem cells (MSCs), the precursors of different mesenchymal tissues with a role in processes in which HB-EGF is often involved, normally express HER-1, but not HB-EGF itself. Under the effect of HB-EGF, MSCs proliferate more rapidly and persistently, without undergoing spontaneous differentiation. This effect occurs in a dose-dependent fashion, and is specific, direct, and HER-1 mediated, as it is inhibited by anti-HER-1 and anti-HB-EGF blocking antibodies. Moreover, HB-EGF reversibly prevents adipogenic, osteogenic, and chondrogenic differentiation induced with specific media. These data show that HB-EGF/HER-1 signaling is relevant to MSC biology, by regulating both proliferation and differentiation.