Mammary derived growth inhibitor (MDGI) is a member of the family of cytoplasmic fatty acid binding proteins (FABPs), which bind hydrophobic ligands such as fatty acids, retinoids, eicosanoids and prostaglandines. MDGI and an 11 amino acid MDGI-derived conserved C-terminal peptide (P108) inhibits growth of normal mammary epithelial cells in tissue and organ culture, but fails to inhibit proliferation of many breast cancer cell lines in vitro. Here, the effects of peptide P108 on tumor growth of MCF-7, MDA-MB468 and MDA-MB231 human breast cancer cell lines in nude mice were tested. To deliver P108 into tumors, a novel peptide production system was applied for expression and secretion of small bioactive peptides in mammalian cells. Functional differentiation was observed in MCF-7 and MDA-MB468 cells upon P108 expression. In addition, EGF-dependent colony formation in soft agar by MDA-MB468 cells was inhibited by secreted P108. Tumor growth in athymic nude mice was suppressed in all three cell lines tested. Furthermore, P108 expressed by MCF-7/P108 cells caused paracrine tumor growth inhibition of MDA-MB231 cells. These results indicate that breast cancer inhibition by P108 is independent of binding to hydrophobic ligands and is perhaps mediated by interference with EGF-dependent signaling pathways.