Metallothionein-directed expression of TGF alpha in transgenic mice induced a spectrum of changes in the growth and differentiation of certain adult tissues. First, TGF alpha promoted a uniform epithelial hyperplasia of several organs without otherwise causing major alterations in tissue architecture. Second, in pancreas it promoted proliferation of both acinar cells and fibroblasts and focally altered acinar cell differentiation. The magnitude of this response was proportional to the level of local, tissue-specific TGF alpha expression and was reproduced when expression of TGF alpha was placed under the control of the elastase promoter, implying an autocrine or paracrine mechanism. Third, TGF alpha was oncogenic in vivo. It caused dramatic hyperplasia and dysplasia of the coagulation gland epithelium, which displayed evidence of carcinoma in situ, and in postlactational mammary gland it induced secretory mammary adenocarcinomas. Thus, TGF alpha displays characteristics of both a potent epithelial cell mitogen and an oncogenic protein in vivo.