Expression of human keratinocyte growth factor (KGF/FGF-7) was directed to hepatocytes during the later period of mouse gestation using a human apolipoprotein E (ApoE) gene promoter and its associated liver-specific enhancer. Human KGF was detectable in liver extracts and serum prepared from e17.5-e19.5 embryos, concomitant with the appearance of morphological abnormalities in several organs which express KGF receptor. The most striking phenotypic aberration in the ApoE-hKGF transgenic embryos was marked hyperplasia and cystic dilation of the cortical and medullary kidney collecting duct system, a phenotype resembling infantile polycystic kidney disease in humans. Transgenic embryos had enlarged livers, with prominent biliary epithelial hyperplasia, and also exhibited enhanced bronchiolar epithelial and type II pneumocyte proliferation. There was variable hyperplasia of intestinal epithelia, and urothelium of the urinary bladder and ureters. When compared to age-matched littermate controls, marked epidermal papillomatous acanthosis and hyperkeratosis in the skin, with a notable decrease in the number of developing hair follicles was seen in transgenic embryos. The pancreas exhibited significant ductal hyperplasia, with an increase in the number of ductal epithelial cells staining positive for insulin expression. High systemic levels of KGF during the latter stages of embryogenesis causes abnormalities in epithelial growth and differentiation within multiple organ systems and results in perinatal lethality. Correct temporal and spatial expression of KGF during the latter stages of organ development is likely to play a critical role in mesenchymal-epithelial signaling required for normal embryonic growth and development.