Retinoids have been shown the most powerful inducers of transglutaminase activity, a well known marker of differentiation. In this work, we tested the effects of all-trans retinoic acid and EGF, used alone or in combination, on transglutaminase activity in a squamous, epithelial carcinoma cell line, HEp-2. We demonstrated that nanomolar EGF further enhances transglutaminase activity previously induced by all-trans retinoic acid. Confocal laser scanning microscopy revealed functional changes in transglutaminase activity localisation, at first restricted to the outermost region of cytosol, then diffused both in the membrane region and extracellular space. RT-PCR showed the presence of mRNA transcripts of different transglutaminases (1, 2, 3). Transglutaminase 2 expression was increased by either all-trans retinoic acid or EGF, and further up-regulated by the simultaneous addition of both substances. These effects were confirmed by Western blotting with transglutaminase 2 specific antibody. The results obtained by combined use of retinoic acid and EGF suggest that transglutaminase activity and expression are differently regulated, and that EGF-signalling can be involved in differentiation of epithelial carcinoma cells induced by retinoids.