The epidermal growth factor (EGF) family of ligands interacts with the epidermal growth factor receptor (EGF-R) to produce numerous direct and indirect actions on central nervous system cells. They induce the proliferation of astrocytes and multipotent progenitors ('stem' cells) and promote the survival and differentiation of postmitotic neurons. Heparin-binding epidermal growth factor (HB-EGF) interacts with both EGF-R and a related receptor, ErbB4, whereas transforming growth factor alpha (TGFalpha) interacts only with EGF-R. Because of the unique characteristics of HB-EGF and the potential utility of EGF family members in brain repair, we examine the effects of HB-EGF on rat and mouse CNS cells in vitro and compare them to those of TGFalpha. We find that, like TGFalpha, HB-EGF stimulates the proliferation of CNS astrocytes and multipotent progenitors. These proliferative effects require the expression of EGF-R, as no such effects are observed in cells derived from EGF-R-/- mice. Both HB-EGF and TGFalpha enhanced the survival of neurons derived from the neocortex and the striatum. Within these neuron-enriched cultures, nestin-positive cells but not neurons express EGF-R mRNA, indicating that the neurotrophic actions of EGF-R ligands are a result of indirect stimulation mediated by non-neuronal cells. The neurotrophic actions of HB-EGF and TGFalpha are accompanied by an elevation in immunoreactive dual phosphorylated mitogen-activated protein kinase (MAP kinase) in neurons, providing evidence that the MAP kinase cascade mediates these actions. In situ hybridization studies demonstrate that HB-EGF mRNA is present within the brainstem as early as E14 and subsequently is found in the developing cortical plate, hippocampus, cerebellar Purkinje cells and ventrobasal thalamus, among other brain areas. These findings indicate that HB-EGF may be an important trophic factor in the developing CNS and is a useful candidate molecule for brain repair strategies.