Previously, we showed that ACh-induced proliferation of human colon cancer cells is mediated by transactivation of epidermal growth factor (EGF) receptors (EGFRs). In the present study, we elucidate the molecular mechanism underlying this action. ACh-induced proliferation of H508 colon cancer cells, which express exclusively M3 muscarinic receptors (M3Rs), was attenuated by anti-EGFR ligand binding domain antibody, a broad-spectrum matrix metalloproteinase (MMP) inhibitor, anti-MMP7 antibody, a diphtheria toxin analog that blocks release of an EGFR ligand [heparin-binding EGF-like growth factor (HBEGF)], and anti-HBEGF antibody. Conditioned media from ACh-treated H508 cells induced proliferation of SNU-C4 colon cancer cells that express EGFR but not M3R. These actions were attenuated by an EGFR inhibitor and by anti-EGFR and anti-HBEGF antibodies. In H508, but not SNU-C4, colon cancer cells, ACh caused a striking dose- and time-dependent increase in levels of MMP7 mRNA and MMP7 protein. Similarly, ACh induced robust MMP1 and MMP10 gene transcription. ACh-induced MMP1, MMP7, and MMP10 gene transcription was attenuated by atropine, anti-EGFR antibody, and chemical inhibitors of EGFR and ERK activation. In contrast, inhibitors of phosphatidylinositol 3-kinase and NF-kappaB activation did not alter MMP gene transcription. Collectively, these findings indicate that MMP7-catalyzed release of HBEGF mediates ACh-induced transactivation of EGFR and consequent proliferation of colon cancer cells. ACh-induced activation of EGFR and downstream ERK signaling also regulates transcriptional activation of MMP7, thereby identifying a novel feed-forward mechanism for neoplastic cell proliferation.