Previously, we showed that acetylcholine (ACh)-induced proliferation of human colon cancer cells is mediated by transactivation of epidermal growth factor receptors (EGFR). In the present study, we elucidated the molecular mechanism underlying this action. ACh-induced proliferation of H508 colon cancer cells, which express exclusively M₃ muscarinic receptors (M₃R), was attenuated by the following: anti-EGFR ligand binding domain antibody, a broad spectrum matrix metalloproteinase (MMP) inhibitor, anti-MMP7 antibody, a diphtheria toxin analogue that blocks release of an EGFR ligand (HBEGF), and by anti-HBEGF antibody. Conditioned media from ACh-treated H508 cells induced proliferation of SNU-C4 colon cancer cells that express EGFR but not M₃R. These actions were attenuated by an EGFR inhibitor, and by anti-EGFR and anti-HBEGF antibodies. In H508, but not SNU-C4, colon cancer cells ACh caused a striking dose- and time-dependent increase in levels of MMP7 mRNA and MMP7 protein. Likewise, ACh induced robust MMP1 and 10 gene transcription. ACh-induced MMP1, 7, and 10 gene transcription was attenuated by atropine, by anti-EGFR antibody, and by chemical inhibitors of EGFR and extracellular-regulated kinase (ERK) activation. In contrast, inhibitors of phosphoinositol-3-kinase and NF-B activation did not alter MMP gene transcription. Collectively, these findings indicate that MMP7-catalyzed release of HBEGF mediates ACh-induced transactivation of EGFR and consequent proliferation of colon cancer cells. ACh-induced activation of EGFR and downstream ERK signaling also regulates transcriptional activation of MMP7, thereby identifying a novel feed-forward mechanism for neoplastic cell proliferation.