To define the role of TGF alpha in normal tissue function and in pathogenesis, transgenic mice have been generated bearing a fusion gene consisting of the mouse metallothionein 1 promoter and a human TGF alpha cDNA. In these mice, human TGF alpha RNA and protein are abundant in many tissues and TGF alpha is detectable in blood and urine. The effects of TGF alpha overproduction in transgenic mice are pleiotropic and tissue specific. The liver frequently contains multifocal, well-differentiated hepatocellular carcinomas that express enhanced levels of human TGF alpha RNA. The mammary gland exhibits impeded morphogenetic penetration of epithelial duct cells into the stromal fat pad. The pancreas shows progressive interstitial fibrosis and a florid acinoductular metaplasia, during which acinar cells appear to degranulate, dedifferentiate, and assume characteristics of intercalated or centroacinar duct cells. TGF alpha therefore plays an important role in cellular proliferation, organogenesis, and neoplastic transformation.