Heparin-binding EGF-like growth factor (HB-EGF) is a recently identified potent mitogen for smooth muscle cells and fibroblasts. HB-EGF has been shown to be an EGF receptor ligand, and also to stimulate epithelial cell growth. A human hepatoma-derived cell line, Mahlavu, was analyzed for the production of HB-EGF mRNA and active HB-EGF protein. It was found that the cell line synthesized very low or undetectable basal level of HB-EGF mRNA. However, the addition of 12-O-tetradecanoylphorbol-13-acetate (TPA) led to a rapid and transient rise in HB-EGF mRNA level. HB-EGF in Mahlavu cells appears to be regulated by a protein kinase C (PKC) pathway, since PKC inhibitors, H7, staurosporin, and calphostin C, abrogated the induction of HB-EGF mRNA by TPA. Unlike vascular smooth muscle cells, induction of HB-EGF gene transcription by TPA was blocked completely by incubation with cycloheximide, suggesting that protein synthesis may be a prerequisite for HB-EGF gene transcription in Mahlavu cells. Mahlavu cells were also found to release a bioactive HB-EGF-like protein into conditioned medium which stimulates DNA synthesis in EP170.7 cells. This activity was neutralized by an anti-HB-EGF antibody. These results indicate that HB-EGF gene transcription is regulated via a PKC pathway, resulting in secretion of active HB-EGF into the culture medium of hepatoma-derived Mahlavu cells.