Muc4/sialomucin complex (SMC) is a multifunctional glycoprotein complex which can repress apoptosis in transfected tumor cells. Its transmembrane subunit acts as an intramembrane ligand for the receptor tyrosine kinase ErbB2 to induce the phosphorylation of ErbB2 and, by acting synergistically with the ErbB3 ligand neuregulin, can potentiate the phosphorylation of ErbB2 and ErbB3. In the present study we show that Muc4/SMC alone robustly induces the phosphorylation of ErbB2 to enhance the tyrosine phosphate epitope (Tyr1248) recognized by anti-phospho-ErbB2. Although this tyrosine phosphorylation has been implicated in cell transformation, it does not activate any of the three mitogen-activated protein kinases (MAPKs) or protein kinase B/Akt of the phosphatidyl inositol 3-kinase pathway. Instead, Muc4/SMC expression induces up-regulation of the cell cycle inhibitor p27(kip), consistent with the expression of Muc4/SMC in differentiated, rather than proliferative, epithelial cells. Interestingly, a combination of Muc4/SMC and neuregulin down-regulate p27(kip) and activate protein kinase B/Akt. These observations suggest that Muc4/SMC acts as a regulator of differentiation by inducing a limited phosphorylation of ErbB2 and a modulator of proliferation when acting synergistically with neuregulin to induce a more extensive phosphorylation on both ErbB2 and ErbB3.