Hepatoma-derived growth factor (HDGF) is highly expressed in tumor cells, and stimulates their proliferation. In the present study, we investigated the role of HDGF in tumorigenesis and elucidated the mechanism of action. Stable transfectants of NIH3T3 cells overexpressing HDGF did not show significant anchorage-independent growth in soft agar assay. However, these stable transfectants overexpressing HDGF generated sarcomatous tumors in nude mice. These tumors were red-colored macroscopically, and histologically showed a rich vascularity. Immunohistochemical analysis using CD31 antibody showed new vessel formation. Recombinant HDGF stimulated proliferation of human umbilical vein endothelial cells in a dose-dependent manner, and stimulated tubule formation. Furthermore, vascular endothelial growth factor (VEGF) was detected immunohistochemically in the tumor tissues. Transient expression of HDGF induced both VEGF gene and protein expression as demonstrated by a reporter assay using VEGF gene promoter. The administration of anti-VEGF neutralizing antibody significantly suppressed, but did not block, the tumor growth of HDGF-overexpressing cells in nude mice. Thus, these findings suggested that HDGF-induced tumor formation in vivo involves induction of VEGF as well as direct angiogenic activity.