The human cell line HT-29 provides a model system for studying regulation of proliferation and differentiation in intestinal epithelial cell lineages: (i) HT-29 cells cultured in glucose resemble undifferentiated multipotent transit cells located in the lower half of intestinal crypts; (ii) proliferating HT-29 cells cultured in inosine resemble committed cells located in the upper half of the crypt; (iii) nonproliferating, confluent HT-29-inosine cells have features of differentiated enterocytes and goblet cells that overlie small intestinal villi. A cDNA library prepared from HT-29-inosine cells was screened with a series of subtracted cDNA probes to identify proteins that regulate proliferation/differentiation along the crypt-villus axis. A cDNA was recovered that encodes a 202-amino acid protein with four predicted membrane spanning domains and two potential sites for N-linked glycosylation. Levels of this new member of the superfamily of tetraspan membrane proteins (TMPs) increase dramatically as nondividing epithelial cells exit the proliferative compartment of the crypt-villus unit and migrate onto the villus. The protein is also produced in nondividing hepatocytes that have the greatest proliferative potential within liver acini. Three sets of observations indicate that in the appropriate cellular context, intestinal and liver (il)-TMP can mediate density-associated inhibition of proliferation. (i) Accumulation of il-TMP glycoforms precedes terminal differentiation of HT-29-inosine cells and occurs as they undergo density-dependent cessation of growth. il-TMP levels are lower and glycosylation less extensive in HT-29-glucose cells, which do not undergo growth arrest at confluence. (ii) HeLa cells normally do not produce il-TMP. Forced expression of il-TMP inhibits proliferation as cells approach confluence. The extent of il-TMP glycosylation in the transfected cells is similar to that observed in HT-29-inosine cells and greater than in HT-29-glucose cells. (iii) SW480 cells are derived from a human colon adenocarcinoma and do not express il-TMP. Like nontransfected HeLa cells, they do not stop dividing at confluence, whether grown in medium containing glucose or inosine. Expression of il-TMP has no effect on the growth properties of SW480 cells. The extent of il-TMP glycosylation in SW480-glucose cells is similar to that noted in HT-29-glucose cells, lending further support to the notion that il-TMP's activity is related to its state of N-glycosylation.