Ebp1, an ErbB-3 binding protein, translocates from the cytoplasm to the nucleus of human breast cancer cells after treatment with the ErbB-3 ligand, heregulin. The purpose of these studies was to examine the effects of ectopic expression of ebp1 on the biological properties of human ErbB-3-expressing breast carcinoma cell lines. Ectopic expression of ebp1 in ErbB-2, ErbB-3-expressing breast carcinoma cell lines resulted in inhibition of colony formation, a decreased proliferation rate, an accumulation of cells in the G2/M phase of the cell cycle, and suppression of growth in soft agar. Ectopic expression of ebp1 led to a more differentiated phenotype in AU565 breast cancer cells, as evidenced by increased expression of lipid droplets and of the milk protein casein. Basal phosphorylation of extracellular regulated kinases (Erks) 1 and 2, kinases activated by heregulin treatment, was also observed in ebp1 transfectants. The promoter for the intercellular adhesion molecule-1 gene, a heregulin-inducible gene, was constitutively activated in ebp1 transfectants as determined by reporter construct analysis. These data demonstrate that ectopic expression of the ErbB-3 binding protein Ebp1 inhibits proliferation and induces differentiation of ErbB-2, ErbB-3-expressing human breast carcinoma cell lines.