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Squamous cell differentiation in tracheobronchial epithelial cells is accompanied by many biochemical and molecular changes. One of the molecular changes in rabbit tracheal epithelial (RbTE) cells is the differential expression of a squamous cell-specific mRNA encoded by the complementary DNA SQ10. In this study, we sequenced SQ10 complementary DNA and showed that this gene encodes a preprorelaxin-like protein. The DNA sequence of the coding region of SQ10 has 68% identity with the human preprorelaxin mRNA, whereas the deduced amino acid sequence exhibits 46% identity with human preprorelaxin. An antiserum (pepIV-Ab) was raised against a synthetic 22-amino acid oligopeptide of the protein encoded by SQ10. Immunoblot analysis of cellular extracts of squamous-differentiated cells showed that this antiserum reacted with proteins of 22 and 20 kilodaltons, possibly constituting prepro- and proforms of this protein. These proteins were undetectable in undifferentiated RbTE cells. In agreement with these observations, PepIV-Ab specifically stained the cytosol of squamous-differentiated RbTE cells but failed to stain undifferentiated cells. PepIV-Ab recognized a 20 and 16 kilodalton polypeptide in medium conditioned by squamous-differentiated RbTE cells, indicating that the prorelaxin-like protein is secreted. The amino acid sequences of three peptides that were obtained after tryptic digestion of the secreted 16 kilodalton protein were identical to sequences encoded by SQ10. Retinoids which have been shown to inhibit squamous differentiation suppressed the induction of SQ10 protein as well as mRNA in a concentration-dependent manner. The concentration at which retinoic acid caused a 50% inhibition of SQ10 mRNA levels was approximately 5 nM.(ABSTRACT TRUNCATED AT 250 WORDS)