The growth of A-1 fibroblasts depends on exogenous amyloid beta/A4 protein precursor (APP), providing a simple bioassay to study the function of APP. Our preliminary study, testing the activity of a series of fragments derived from the secreted form of APP-695 (sAPP-695) on this bioassay, has shown that at least one of the active sites of sAPP-695 was localized within a 40-mer sequence (APP296-335, Kang sequence; Roch, J.-M., I. P. Shapiro, M. P. Sundsmo, D. A. C. Otero, L. M. Refolo, N. K. Robakis, and T. Saitoh. 1992. J. Biol. Chem. 267:2214-2221). In the present study, to further characterize the growth-promoting activity of sAPP-695 on fibroblasts, we applied a battery of synthetic peptides on this bioassay and found that: (a) the sequence of five amino acids, RERMS (APP328-332), was uniquely required for the growth-promoting activity of sAPP-695; (b) the activity was sequence-specific because the reverse-sequence peptide of the active domain had no activity; and (c) the four-amino-acid peptide RMSQ (APP330-333), which partially overlaps the COOH-terminal side of the active sequence RERMS, could antagonize the activity of sAPP-695. Furthermore, a recombinant protein which lacks this active domain (APP20-591 without 306-335) did not promote fibroblast cell growth, suggesting that this domain is the only site of sAPP-695 involved in the growth stimulation. The availability of these biologically active, short peptides and their antagonists should prove to be an essential step for the elucidation of APP involvement in regulation of cellular homeostasis.