A variety of cancer cells overexpress transforming growth factor alpha (TGF alpha), a mitogenic peptide. A cDNA sequence coding for the full-length human TGF alpha precursor protein was subcloned into a retroviral expression vector and introduced into clone 7 NIH 3T3 cells, which have low numbers of endogenous epidermal growth factor receptors (EGFRs). The autocrine synthesis of TGF alpha by these cells resulted in their focal transformation. In contrast, control NIH 3T3 cells treated in a paracrine manner with exogenous, saturating concentrations of the mature form of TGF alpha, though stimulated to divide, remained morphologically untransformed. The addition of saturating quantities of soluble, mature TGF alpha to NIH 3T3 cells expressing the transferred TGF alpha gene actually suppressed their growth and focal transformation. The transformation induced by the TGF alpha gene remained an EGFR-dependent process, since the degree of transformation was correlated with EGFR expression in NIH 3T3 cells and since NR6 cells, which are Swiss 3T3 cells devoid of endogenous EGFRs, were transformed by the TGF alpha vector only when exogenous EGFR genes were also introduced. When inoculated into nude mice, the TGF alpha-expressing cells rapidly gave rise to tumors that grew progressively, whereas control cells did not form tumors. We conclude that in certain circumstances autocrine TGF alpha can be more oncogenic than paracrine and that paracrine TGF alpha can suppress this effect.