Neuregulin, or neu differentiation factor, induces cell proliferation or differentiation through interaction with members of the ErbB family of receptor tyrosine kinases. We report that neuregulin can also induce profound morphogenic responses in cultured epithelial cells of different origins. These effects include scattering of small epithelial islands and rearrangement of larger cell islands into ordered ring-shaped arrays with internal lumens. The ring-forming cells are interconnected by cadherin- and beta-catenin-containing adherens junctions. In confluent cultures, neuregulin treatment induces formation of circular lumenlike gaps in the monolayer. Both cell scattering and ring formation are accompanied by a marked increase in cell motility that is independent of hepatocyte growth factor/scatter factor and its receptor (c-Met). Affinity-labeling experiments implied that a combination of ErbB-2 with ErbB-3 mediates the morphogenic signal of neuregulin in gastric cells. Indeed, a similar morphogenic effect could be reconstituted in nonresponsive cells by coexpression of ErbB-2 and -3. We conclude that a heterodimer between the kinase-defective neuregulin receptor, ErbB-3, and the coreceptor, ErbB-2, mediates the morphogenetic action of neuregulin.