Although the biologic response modifier tumor necrosis factor-alpha (TNF) is a known differentiation inducer in hematopoietic cells, its role in differentiation of other tissue types has yet to be elucidated. In the studies presented here, TNF treatment of the human rectal adenocarcinoma cell line, DiFi, elicits characteristics of early stage differentiating, mucin-producing colonocytes. Not only are TNF-treated DiFi cells growth-inhibited by TNF, but they also display a unique morphology. Additionally, TNF treatment of DiFi cells enhances > fivefold the expression of high molecular weight mucin glycoproteins, as measured by [125I]-wheat germ agglutinin (WGA) binding and the human milk fat globule-1 (HMFG-1) anti-MUC1 antibody reactivity. The induction of these differentiation characteristics correlates with novel alterations in epidermal growth factor receptor (EGF-R). Following 5-day TNF treatment of DiFi cultures, EGF receptor levels, kinase autophosphorylation activity, and receptor tyrosine phosphorylation are reduced by > fourfold. The establishment of a model system in which goblet-like cell characteristics and alterations in a growth factor receptor can be induced in vitro may be potentially useful in studying the underlying mechanisms of colonic epithelial cell proliferation and differentiation.