The human aspartyl (asparaginyl) beta-hydroxylase (HAAH) is a highly conserved enzyme that hydroxylates epidermal growth factor-like domains in transformation-associated proteins. We previously reported overexpression of the HAAH gene in human hepatocellular carcinomas and cholangiocarcinomas (L. Lavaissiere et al., J. Clin. Investig., 98: 1313-1323, 1996). In the present study, we determined whether HAAH protein overexpression was linked to cellular proliferation or malignant transformation of bile ducts by using a human disease and rat model of bile duct proliferation. In addition, the transforming properties of the AAH genes were assessed by transient and stable transfection of NIH-3T3 cells with human and murine wild-type as well as mutant cDNA constructs that lacked hydroxylation activity. Cellular characteristics of the malignant phenotype were assessed by formation of transformed foci, growth in soft agar, and tumor development in nude mice. We found that HAAH gene expression was undetectable during bile duct proliferation in both human disease and rat models as compared with cholangiocarcinoma. Overexpression of HAAH in NIH-3T3 cells was associated with generation of a malignant phenotype, and enzymatic activity was required for cellular transformation. These findings suggest that overexpression of HAAH is linked to cellular transformation of biliary epithelial cells.