c-erbB-2, a member of the tyrosine kinase oncogene family, is overexpressed in about 30% of human breast tumors where it correlates with poor prognosis. In vitro studies have suggested that increased expression of the receptor plays an important role in malignant progression. To better understand the direct effects of p185HER2 overexpression, a human c-erbB-2 expression vector was transfected into the hormone-dependent MCF-7 human breast carcinoma cell line and cell growth was analysed. Unexpectedly, colony formation assay revealed a reduction in the number and size of colonies as compared with mock-transfected cells. In hormone-deprived medium, c-erbB-2 transfected cells acquired growth capability, consistent with previous reports. By contrast, two c-erbB-2-transfected clones grown in complete medium showed a reduced proliferation rate despite the activation of a fully functional oncoprotein capable of autophosphorylation and induction of the MAPK pathway. The number of c-erbB-2-overexpressing cells in the S phase of the cell cycle was about one-half the number of control and mock-transfected cells. Also, overexpression of c-erbB-2 induced overexpression of p21WAF1, pRB hypophosphorylation and a mature differentiated cell phenotype with production of lipid droplets. Functional inactivation of p185HER2 by means of a specific single chain antibody indicated the c-erbB-2-dependence of the observed alterations. These data show that the exogenous overexpression of the c-erbB-2 gene in hormone-dependent breast cancer cells inhibits proliferation and induces differentiation.