Growth factors are believed to play an important role in regulating cell fate and cell behavior during embryonic development. Transforming growth factor alpha (TGF alpha), a member of the epidermal growth factor (EGF) superfamily, is a small polypeptide growth factor. Upon binding to its receptor, the EGF receptor (EGFR), TGF alpha can exert diverse biological activities, such as induction of cell proliferation or differentiation. To explore the possibility that TGF alpha might regulate cell fate during murine eye development, we generated transgenic mice that express human TGF alpha in the lens under the control of the mouse alpha A-crystallin promoter. The transgenic mice displayed multiple eye defects, including corneal opacities, cataracts and microphthalmia. At early embryonic stages TGF alpha induced the perioptic mesenchymal cells to migrate abnormally into the eye and accumulate around the lens. In situ hybridization revealed that the EGFR mRNA is highly expressed in the perioptic mesenchyme, suggesting that the migratory response is mediated by receptor activation. In order to test this model, the TGF alpha transgenic mice were bred to EGFR mutant waved-2 (wa-2) mice. We found that the eye defects of the TGF alpha transgenic mice are significantly abated in the wa-2 homozygote background. Because the EGFR mutation in the wa-2 mice is located in the receptor kinase domain, this result indicates that the receptor tyrosine kinase activity is critical for signaling the migratory response. Taken together, our studies demonstrate that TGF alpha is capable of altering the migratory decisions and behavior of perioptic mesenchyme during eye development.