Overexpression of the HER2 (neu/c-erbB-2) oncogene frequently coincides with an aggressive clinical course of certain human adenocarcinomas. Expression and secretion of aberrant HER2 splice variants has been reported in various cell lines and tissues and can interfere with the oncogenic HER2 activity. Here we demonstrate, using two different approaches, that expression of a truncated 100 kDa HER2 variant which encodes the extracellular domain of HER2 (HER-ECD) inhibits growth factor-mediated tumour cell proliferation. A HER2-ECD cDNA encoding the truncated variant was overexpressed in MCF7 breast cancer cells. HER2-ECD overexpression decreased spontaneous proliferation of MCF7 cells as well as heregulin-mediated soft agar colony formation. Concomitantly, heregulin-induced phosphorylation of HER4 as well as downstream activation of p44/p42 MAP-kinases was decreased. To confirm these data, ribozymes were targeted to the 3'-untranslated region of the 2.3 kb HER2-ECD mRNA which is spontaneously expressed in MKN7 gastric cancer cells. HER2-ECD-targeted ribozymes downregulated HER2-ECD expression and enhanced EGF-mediated soft agar colony formation of MKN7 cells. In parallel, EGF-induced activation of p44/p42 MAP-kinases and activation of c-Fos expression were increased in ribozyme-transfected MKN7 cells. Finally, in RT-PCR we found a trend towards a progressive loss of 2.3 kb HER2-ECD mRNA expression in more advanced gastric tumours. These data show that the HER2-ECD variant inhibits growth factor-mediated tumour cell proliferation suggesting an important role during the progression of human cancer.