Although very few studies have addressed the molecular and cellular mechanisms underlying the development of biliary tract cancer (BTC), several lines of evidence suggest a role for the erbB receptor family. Overexpression and activation of erbB2 has been reported in a significant percentage of human BTC. Further, we previously reported that overexpression of erbB2 basal epithelial cells of the biliary tract (BK5.erbB2 mouse) led to the development of BTC. However, the mechanisms by which erbB2 overexpression led to the spontaneous development of tumors specifically in the biliary tract are not completely understood. The goals of the current study were to (1) determine whether a cooperative relationship between bile acid exposure and erbB2 activation exists during biliary tract carcinogenesis and (2) to characterize the mechanism(s) underlying bile acid-mediated biliary tract carcinogenesis in cells with activated erbB2. In this study, we demonstrated that the secondary conjugated bile acid, taurochenodeoxycholic acid (TCDC), increased proliferation of primary cultured gallbladder epithelial cells from BK5.erbB2 mice and human BTC cells. TCDC treatment activated EGFR/erbB2 and downstream signaling molecules in both primary cultured cells and human BTC cells. TCDC also increased the expression of epidermal growth factor receptor (EGFR) ligands and TACE activity in human BTC cells. Inhibition of src activation led to attenuation of bile-induced upregulation of TACE activity as well as signaling through the EGFR/erbB2, suggesting that during the development of BTC erbB2 overexpression/activation accelerates the bile acid-induced signaling cascade: bile acid → src → TACE → EGFR/erbB2 → downstream signaling. We also provide direct evidence that bile acids possess tumor promoting capacity in epithelial cells overexpressing erbB2 using the two-stage skin carcinogenesis model. Collectively these findings suggest cooperative roles for bile acid and erbB2 activation in epithelial cell proliferation; bile acid appears to accelerate erbB2-induced pro-tumorigenic activities in the biliary tract and skin.