The effects exerted by the keratinocyte growth factor (KGF) on intestinal epithelial cells cultured in vitro are influenced by cell confluence and differentiation through the modulation of keratinocyte growth factor receptor (KGFR) expression. In order to better define the contribution of KGF on the intestinal epithelial cell differentiation and proliferation, here we developed a coculture model, able to mimick in vitro the epithelial-mesenchymal interactions of the bowel. In consequence of its ability to produce KGF, demonstrated by real-time PCR and Western blot analysis, the human colon fibroblast cell line CCD-18 has been selected as coculture partner for the intestinal epithelial Caco-2 cell line. Analysis of the expression of the differentiation and proliferation markers CEA and Ki67, through double immunofluorescence assays, showed that either the coculture with CCD-18 cells or the incubation with primary colon fibroblast-derived conditioned media (CM-F and CM-F2) induced an increase in differentiation and proliferation of confluent intestinal epithelial Caco-2 or HT29 cells, parallel to that obtained by KGF treatment. Use of anti-KGF blocking antibodies and of a tyrosine kinase KGFR inhibitor demonstrated the contribution of KGF and the direct role of its receptor in the regulation of epithelial growth and differentiation, indicating that KGF is a crucial paracrine factor involved in promoting these effects.