The human teratocarcinoma NTERA-2 cl. D1 (NT2/D1) cell is a cloned multipotential embryonal cancer cell line that differentiates into a neuronal phenotype and other cellular lineages with retinoic acid (RA) treatment. Here we report that mRNA for the transforming growth factor-alpha is expressed in these RA-untreated cells and that RA-treatment results in a reduction of mRNA expression within 24 hr of treatment. In total cellular RNA, TGF-alpha mRNA is not detectable by Northern analysis at 6 days when there is increased expression of the human homeotic genes Hu-1 (Hox 2.1) and Hu-2 (Hox 2.2), known markers of RA response in NT2/D1 cells. RA treatment also causes a marked reduction in cloning efficiency and tumorigenicity of these cells. The addition of TGF-alpha or EGF (epidermal growth factor) protein to RA-untreated NT2/D1 cells augments soft agar cloning under limited fetal calf serum conditions. Blocking monoclonal antibodies directed against the EGF receptor (EGFr) can prevent this augmentation. We conclude that TGF-alpha expression inversely correlates with the state of RA-induced differentiation of this human teratocarcinoma cell and that TGF-alpha and EGF proteins are stimulatory growth factors in NT2/D1 cells under these culture conditions.