SH3-containing proteins are involved in signal transduction by a number of growth factor receptors and in the organization of the cytoskeleton. The recently identified Eps8 protein, which contains an SH3 domain, is coupled functionally and physically to the EGFR and is tyrosine phosphorylated by this receptor and other receptors as well. Here, we examined the regulation of eps8 expression in response to mitogenic or differentiative signals. We show that Eps8 is expressed at low levels in resting fibroblasts, but its expression is strongly induced during activation by serum, phorbol esters and the v-src oncogene. Conversely, expression of Eps8, but not of other EGFR substrates such as Shc or Eps15, is virtually extinguished in non-proliferating, terminally differentiated murine myogenic cells. The putative role of Eps8 protein as a v-Src substrate was analysed in murine fibroblasts and in quail myogenic cells expressing a temperature-sensitive variant of the tyrosine kinase. Tyrosine phosphorylation of Eps8 was detected only at the permissive temperature. A non-myristylated, transformation-defective mutant of v-Src did not phosphorylate Eps8, whereas it phosphorylated Shc. Together, these findings indicate that Eps8 may be a critical substrate of v-Src. They further establish Eps8 as an example of a signal transducer whose expression senses the balance between growth and differentiation and might, therefore, be involved in the determination of the phenotype.