Data concerning the prognostic value of ErbB4 in breast cancer and effects on cell growth have varied in published reports, perhaps due to the unknown signaling consequences of expression of the intracellular proteolytic ErbB4 s80(HER4) fragment or due to differing signaling capabilities of alternatively spliced ErbB4 isoforms. One isoform (Cyt1) contains a 16-residue intracellular sequence that is absent from the other (Cyt2). We expressed s80(Cyt1) and s80(Cyt2) in HC11 mammary epithelial cells, finding diametrically opposed effects on the growth and organization of colonies in three-dimensional matrices. Whereas expression of s80(Cyt1) decreased growth and increased the rate of three-dimensional lumen formation, that of s80(Cyt2) increased proliferation without promoting lumen formation. These results were recapitulated in vivo, using doxycycline-inducible, mouse breast-transgenic expression of s80(Cyt1) amd s80(Cyt2). Expression of s80(Cyt1) decreased growth of the mammary ductal epithelium, caused precocious STAT5a activation and lactogenic differentiation, and increased cell surface E-cadherin levels. Remarkably, ductal growth inhibition by s80(Cyt1) occurred simultaneously with lobuloalveolar growth that was unimpeded by s80(Cyt1), suggesting that the response to ErbB4 may be influenced by the epithelial subtype. In contrast, expression of s80(Cyt2) caused epithelial hyperplasia, increased Wnt and nuclear beta-catenin expression, and elevated expression of c-myc and cyclin D1 in the mammary epithelium. These results demonstrate that the Cyt1 and Cyt2 ErbB4 isoforms, differing by only 16 amino acids, exhibit markedly opposing effects on mammary epithelium growth and differentiation.