Lysophosphatidic acid (LPA) is a biologically active phospholipid known to have growth factor-like activity on fibroblasts. Although the intracellular signal transduction pathways affected by LPA have been well characterized, the possibility that peptide growth factors are involved in the proliferative response of cells to LPA has not been thoroughly investigated. The focus of this work was to determine the effects of LPA on the proliferation and differentiation of early passage cultured human keratinocytes with emphasis on determining if transforming growth factors (TGF), types alpha and beta, are induced by LPA. The effects of LPA are compared with all-trans-retinoic acid (RA), a structurally unrelated lipid that has previously been shown to induce both TGF alpha and TGF beta and have pronounced effects on keratinocyte proliferation and differentiation. Treatment of cultured human keratinocytes with LPA or RA induced the production of TGF alpha by four- to eightfold. A number of structurally related phospholipids did not mimic the TGF alpha-inducing activity of LPA. LPA is mitogenic for keratinocytes and its stimulatory effect could be blocked with an inhibitory antibody to the EGF/TGF alpha receptor, suggesting that the induction of TGF alpha mediates LPA stimulation of keratinocyte proliferation. LPA and RA also induced both the active and latent forms TGF beta from cultured keratinocytes. Induction of TGF beta may mediate the effects LPA had on keratinocyte differentiation which were apparent by inhibition of proliferation (confluent cultures) and increased involucrin synthesis. Dramatic morphological changes were also observed after LPA treatment. Mechanistic studies suggest that LPA activates both pertussis toxin-sensitive and -insensitive signaling pathways involving protein kinase C activation and protein tyrosine phosphorylation. The effects of LPA on TGF alpha and TGF beta production by keratinocytes likely have in vivo relevance as concluded from rodent studies involving topical LPA treatments.