Overexpression of erbB-2 is associated with a poor prognosis in lung cancer (Kern, 1990). We have found that overexpression of erbB-2 alone in a human bronchial epithelial cell model system is not sufficient for tumor production (Hamburger, 1998). Characterization of our cell model system revealed the presence of constitutive production of the erbB family of ligands: TGF-alpha, amphiregulin, betacellulin, heparin-binding EGF and heregulin. Of these endogenously-expressed ligands, only TGF-alpha expressed and secreted at high levels in the presence of overexpressed erbB-2 was found to correlate with tumorigenicity. Of the four constitutively expressed erbB receptors, erbB-1 and erbB-2 were the major species, while erbB-3 and erbB-4 represented a minor fraction of the population. Endogenously produced TGF-alpha was found to induce formation of erbB-1/erbB-2, erbB-1/erbB-3, erbB-1/erbB-4, erbB-2/erbB-4, erbB-2/erbB-3 and erbB-3/erbB-4 heterodimer complexes. However, only the TGF-alpha-induced erbB-1/erbB-2 heterodimer was formed in tumorigenic E6TM cells but not in non-tumorigenic E6TMA cells (Hamburger, 1998). Activation of the PI-3-kinase signaling pathway was comparable in both cell lines, however, activation of the ras-MAPK signaling pathway, however, was found to correlate with formation of the TGF-alpha induced erbB-1/erbB-2 heterodimer complex and tumorigenicity. We demonstrated that both Stats 1 and 3 co-immunoprecipitate with the constitutively produced erbB-1/erbB-2 heterodimer complex in tumorigenic E6TM cells. Activation of Stats 1 and 3 was shown to be dependent on high levels of TGF-alpha. We demonstrated that the erbS-1/erbB-2 heterodimer and erbB-2 kinase activity was required for Stat activation, while the erbB-1 homodimer was not sufficient for the TGF-alpha-induced activation of Stats 1 and 3. Our results support the hypothesis that the erbB-1/erbB-2 heterodimer, formed and activated in response to TGF-alpha, is critical to the tumorigenic conversion of these lung epithelial cells through the activation of signaling cascades including the MAPK and Stat pathways, but not PI-3-kinase.