The growth of many types of cancer cells can be controlled by surrounding normal cells. However, mechanisms underlying this phenomenon have not been defined. We used a layered culture system to investigate how nontransformed cells suppress the growth of neighboring transformed cells. Direct physical contact between transformed and nontransformed cells was required for growth suppression of transformed cells in this system; communication by diffusible factors was not sufficient. However, significant gap junctional communication was not required, indicating that other intercellular junctions mediated this growth regulatory response. We also report that the Src kinase activity in transformed cells was not directly inhibited by contact with nontransformed cells. Instead, nontransformed cells increased the expression of serum deprivation-response protein and the transcription factor four and a half LIM domain 1 in tumor cells. In addition, these results suggest mechanisms by which normal cells may block Wnt signaling, inhibit insulin-like growth factor activity, and promote host recognition of neighboring tumor cells.