All-trans retinoic acid (RA) treatment of the multipotent human teratocarcinoma (TC) cell line NTERA-2 clone D1 (abbreviated NT2/D1) induces a neuronal phenotype and other cell lineages. NT2/D1 cells basally express transforming growth factor alpha (TGF-alpha) mRNA and secreted protein. After RA-treatment TGF-alpha expression is markedly reduced. This decline in TGF-alpha expression accompanies the induction of the neuronal phenotype and a marked reduction of tumorigenicity in athymic mice. This suggested a causal link between reduced TGF-alpha expression and the induced differentiation or loss of tumorigenicity of these RA-treated TC cells. To evaluate this possibility, an RA-refractory NT2/D1 subclone was analysed. This subclone, designated NT2/D1-R1, failed to induce differentiation or to decrease TGF-alpha expression despite RA treatment. To further explore the relationship between TGF-alpha expression and RA actions in this human TC cell, a TGF-alpha cDNA was stably transfected and expressed in NT2/D1 cells. RA-treatment of independently obtained TGF-alpha over-expressing clones and a representative control transfectant only expressing the neomycin resistance gene produced a neuronal phenotype similar to parental NT2/D1 cells as assessed by morphologic, immunophenotypic, and gene expression markers of differentiation. RA-treatment of these clones also induced a G1 arrest similar to parental cells. However, only the TGF-alpha over-expressing clones that secreted high levels of TGF-alpha protein into the conditioned media before and after RA treatment still developed tumors in athymic mice despite prior exposure to these cells to RA. This finding demonstrates that TGF-alpha can inhibit the anti-tumorigenic effects of RA in human TCs. Thus, over-expression of a single growth factor that normally declines with RA treatment antagonizes the anti-tumorigenic but not the differentiation actions of RA in this human tumor cell.