PKC delta plays a fundamental role in cell cycle control. Consistent with its proposed tumour suppressor function, res transfection of the human keratinocyte cell. line HaCaT results in a loss of PKC delta expression mediated by TGF alpha (Exp. Cell Res., 219, 299, 1995). To get more insight into the role of PKC delta in keratinocytes, we investigated the effects of Rottlerin, a specific inhibitor of protein kinase C delta, in HaCaT cells. After Rottlerin treatment, HaCaT cells lost their cobblestone morphology and displayed a spindle-shaped, fibroblastic phenotype, Additionally, the establishment of cell-cell contacts was prevented. This was caused by an internalization of E-cadherin and beta -catenin as assessed by immunofluorescence. A similar phenotype was observed in the presence of a neutralizing anti-E-cadherin antibody. Rottlerin-treated HaCaT cells proliferated like transformed cells in a three-dimensional cell culture system. We therefore conclude that PKC delta is involved in mediating cell-cell contacts via E-cadherin and hence regulates differentiation HaCaT cells.