BACKGROUND: Glucagon-like peptide-2 is thought to act as a growth factor for the gut, but the localization of the GLP-2 receptor and mechanism of action on epithelial growth is unclear. METHODS AND RESULTS: We found glucagon-like peptide-2 (GLP-2) receptors mainly on subepithelial myofibroblasts in rat, mouse, marmoset and human small and large intestine by immunohistochemistry and in situ hybridisation. By double labelling we found that these GLP-2 receptor immunoreactive cells also produce smooth muscle actin and keratinocyte growth factor (KGF). By subcutaneous infusion of either GLP-2 alone, GLP-2 plus KGF antibody, KGF antibody alone or saline in mice, we found that KGF antibody abolished the growth promoting effect of GLP-2 in the large intestine, but not in the small intestine. CONCLUSIONS: Our findings suggest that GLP-2 in the gut acts by activating receptors on the subepithelial myofibroblasts, causing the release of growth factors, which in turn stimulate intestinal growth.