Make a DIV fill an entire table cell

div height=100% in table cell will work only when table has height attribute itself.

<table border="1" style="height:300px; width: 100px;">
 <tr><td>cell1</td><td>cell2</td></tr>
 <tr>
   <td style="height: 100%">
     <div style="height: 100%; width: 100%; background-color:pink;"></div>
   </td>
   <td>long text long text long text long text long text long text</td>
 </tr>
</table>

UPD in FireFox you should also set height=100% value to the parent TD element

I had to set a fake height to the <tr> and height: inherit for <td>s

tr has height: 1px (it's ignored anyway)

Then set the td height: inherit

Then set the div to height: 100%

This worked for me in IE edge and Chrome:

<table style="width:200px;">
    <tr style="height: 1px;">
        <td style="height: inherit; border: 1px solid #000; width: 100px;">
            <div>
              Something big with multi lines and makes table bigger
            </div>
        </td>
        <td style="height: inherit; border: 1px solid #000; width: 100px;">
            <div style="background-color: red; height: 100%;">
                full-height div
            </div>
        </td>
    </tr>
</table>

The following code works on IE 8, IE 8's IE 7 compatibility mode, and Chrome (not tested elsewhere):

<table style="width:100px"> <!-- Not actually necessary; just makes the example text shorter -->
   <tr><td>test</td><td>test</td></tr>
   <tr>
      <td style="padding:0;">
         <div style="height:100%; width:100%; background-color:#abc; position:relative;">
            <img style="left:90px; position:absolute;" src="../Content/Images/attachment.png"/>
            test of really long content that causes the height of the cell to increase dynamically
         </div>
      </td>
      <td>test</td>
   </tr>
</table>

You said in your original question that setting width and height to 100% didn't work, though, which makes me suspect that there is some other rule overriding it. Did you check the computed style in Chrome or Firebug to see if the width/height rules were really being applied?

Edit

How foolish I am! The div was sizing to the text, not to the td. You can fix this on Chrome by making the div display:inline-block, but it doesn't work on IE. That's proving trickier...