Induction of heparin-binding epidermal growth factor-like growth factor (HB-EGF) mRNA in mouse skin organ culture was blocked by two pan-ErbB receptor tyrosine kinase (RTK) inhibitors but not by genetic ablation of ErbB1, suggesting involvement of multiple ErbB species in skin physiology. Human skin, cultured normal keratinocytes, and A431 skin carcinoma cells expressed ErbB1, ErbB2, and ErbB3, but not ErbB4. Skin and A431 cells expressed more ErbB3 than did keratinocytes. Despite strong expression of ErbB2 and ErbB3, heregulin was inactive in stimulating tyrosine phosphorylation in A431 cells. In contrast, it was highly active in MDA-MB-453 breast carcinoma cells. ErbB2 displayed punctate cytoplasmic staining in A431 and keratinocytes, compared to strong cell surface staining in MDA-MB-453. In skin, ErbB2 was cytoplasmic in basal keratinocytes, assuming a cell surface pattern in the upper suprabasal layers. In contrast, ErbB1 retained a cell surface distribution in all epidermal layers. Keratinocyte proliferation in culture was found to be ErbB1-RTK-dependent, using a selective inhibitor. These results suggest that in skin keratinocytes, ErbB2 transduces ligand-dependent differentiation signals, whereas ErbB1 transduces ligand-dependent proliferation/survival signals. Intracellular sequestration of ErbB2 may contribute to the malignant phenotype of A431 cells, by allowing them to respond to ErbB1-dependent growth/survival signals, while evading ErbB2-dependent differentiation signals.