Epidermal keratinocyte growth and differentiation are regulated by specific families of growth factors and receptors. Peptide growth factors of the epidermal growth factor family stimulate proliferation of clonal density human keratinocytes and suppress markers of terminal differentiation in confluent cultures of human keratinocytes. We present evidence that selected inhibitors of activation of the type I human epidermal growth factor receptor (EGFR or HER-1), namely, neutralizing monoclonal antibody to HER-1/EGFR and the specific tyrosine kinase inhibitor PD 153035, potently inhibit proliferation of human keratinocytes in autonomously replicating subconfluent cultures. Coupled to growth arrest is the suppression of HER-1 tyrosine autophosphorylation in inhibitor-treated human keratinocytes. Proliferation and tyrosine autophosphorylation are initially reversible following removal of the inhibitor and restimulation of cells with epidermal growth factor. Sustained inactivation of HER-1 in autonomously replicating cultures of human keratinocytes induces expression of keratin 1 and keratin 10 genes, early markers of terminal differentiation. Reversal of growth inhibition by epidermal growth factor suppresses keratin 1 and keratin 10 expression. These results demonstrate that human keratinocyte terminal differentiation as well as proliferation are mediated by HER-1. Co-expression of autocrine epidermal growth factor-related ligands as well as HER-1 by human keratinocyte may function as part of the signal transduction network in epidermis to regulate cell number, replication rate, and terminal differentiation.