We previously provided evidence that glucagon-like peptide 1 (GLP-1) induces pancreatic β-cell growth nonadditively with glucose in a phosphatidylinositol (PI) 3-kinase- and protein kinase C ζ-dependent manner. However, the exact mechanism by which the GLP-1 receptor (GLP-1R), a member of the G protein-coupled receptor (GPCR) superfamily, activates the PI 3-kinase signaling pathway to promote β-cell growth remains unknown. We hypothesized that the GLP-1R could activate PI 3-kinase and promote β-cell proliferation through transactivation of the epidermal growth factor (EGF) receptor (EGFR), an event possibly linked to GPCRs via activation of c-Src and the production of putative endogenous EGF-like ligands. Both the c-Src inhibitor PP1 and the EGFR-specific inhibitor AG1478 blocked GLP-1-induced [³H]thymidine incorporation in INS(832/13) cells as well as in isolated rat islets, while only AG1478 inhibited the proliferative action of betacellulin (BTC), an EGFR agonist. Both compounds also suppressed GLP-1-induced PI 3-kinase activation. A time-dependent increase in tyrosine phosphorylation of the EGFR in response to GLP-1 was observed in INS(832/13) cells. This transactivation of the EGFR was sensitive to both the pharmacological agents PP1 and AG1478. The action of GLP-1 and BTC on INS cell proliferation was found to be not additive. Overexpression of a dominant-negative EGFR in INS cells with a retroviral expression vector curtailed GLP-1-induced β-cell proliferation. GLP-1 treatment of INS cells caused a decrease in cell surface-associated BTC, as shown by FACS analysis. Also, the metalloproteinase inhibitor GM6001 and an anti-BTC neutralizing antibody suppressed the GLP-1 proliferative effect. Finally, coculturing the prostatic cancer cell line LNCaP that lacks GLP-1 responsiveness with INS cells increased LNCaP cell proliferation in the presence of GLP-1, thus revealing that INS cells secrete a growth factor in response to GLP-1. GM6001 and an anti-BTC neutralizing antibody suppressed increased LNCaP cell proliferation in the presence of GLP-1 in the coculture experiments. The results are consistent with a model in which GLP-1 increases PI 3-kinase activity and enhances β-cell proliferation via transactivation of the EGFR that would require the proteolytic processing of membrane-anchored BTC or other EGF-like ligands.