Grb2-associated binder-1 (Gab1) is a pleckstrin homology (PH) domain-containing adapter molecule that is believed to function downstream of receptors for growth factors and cytokines. We previously found that deficiency in the mouse Gab1 gene led to embryonic lethality and defects in ERK activation in response to growth factors and cytokines. Here, we established immortalized Gab1-/- cell lines and analysed roles of Gab1 in growth factor-mediated signaling and oncogenesis. EGF-dependent activation of c-Raf and Mek1/2, which function upstream of ERKs, was perturbed in Gab1-/- cells. EGF-mediated upregulation of GTP-bound form of Ras was also reduced in these cells. EGF-dependent GTP/GDP exchange activity for Ras was suppressed in the Gab1-/- cells and expression of a constitutively active Sos restored ERK activation in these cells, indicating that Gab1 functions upstream of Ras. Furthermore, activated form of ErbB2 (active ErbB2)-mediated transformation, such as colony formation in soft agar and tumor formation in nude mice, was strongly suppressed when the Gab1-/- cells were transfected with active ErbB2, whereas the active Sos efficiently induced transformation of Gab1-/- cells. The data show that Gab1 plays an essential role in EGF-receptor/ErbB-mediated cell proliferation and oncogenesis.