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Epidermal cell-derived factors (EDF), present in extracts and supernatant fluids of cultured epidermal cells, were found to stimulate the proliferation of keratinocytes but to inhibit fibroblasts. In vitro, the effect of EDF on epidermal cells resulted in an increased number of rapidly proliferating colonies composed mainly of basal keratinocytes. Control cultures grown in the absence of EDF had a high proportion of terminally differentiated cells. In fibroblast cultures EDF inhibited the ability of fibroblasts to cause contraction of collagen sponges by 90%. Epidermal growth factor, basic fibroblast growth factor, platelet-derived growth factor, transforming growth factor P, nerve growth factor, and extracts of WI-38 cells (human embryonic lung fibroblasts) did not have this inhibitory activity. Application of EDF to surgical wounds stimulated extensive migration and proliferation of keratinocytes from remnants of glands, hair follicles, and wound edges. The restoration of complete epidermal coverage of wounds treated with EDF occurred twice as rapidly as that of control wounds. In addition, regenerating dermis in the EDF-treated wounds contained 1/5th to 1/15th as many cells as wounds treated with epidermal growth factor, urogastrone, transforming growth factor, or phosphatebuffered saline. The use of EDF to enhance re-epithelization and to prevent scar formation is proposed.