Whey acidic protein (WAP) is an abundant rodent milk protein. Its expression in mouse mammary epithelial cell cultures was previously found to require the formation of an extracellular matrix (ECM)-induced three-dimensional alveolar structure. In the absence of such structures, cells were shown to secrete diffusible factors leading to suppression of WAP expression. We demonstrate here that (a) TGF-alpha production and secretion by mammary cells is downregulated by the basement membrane-dependent alveolar structure, and (b) compared with beta-casein, WAP expression is preferentially inhibited both in culture and in transgenic mice when TGF-alpha is added or overexpressed. Thus, (c) the enhanced TGF-alpha production when cells are not in three-dimensional structures largely accounts for the WAP-inhibitory activity found in the conditioned medium. Since this activity can be abolished by incubating the conditioned medium with a function blocking antibody to TGF-alpha. The data suggest that ECM upregulates WAP by downregulating TGF-alpha production. We also propose that changes in TGF-alpha activity during mouse gestation and lactation could contribute to the pattern of temporal expression of WAP in the gland. These results provide a clear example of cooperation among lactogenic hormones, ECM, and locally acting growth factors in regulation of tissue-specific gene expression.