Somatic mutation and neoplastic transformation of diploid Syrian hamster embryo cells were examined concomitantly. Mutations induced by benzo[a]pyrene and N-methyl-N'-nitro-N-nitrosoguanidine were quantitated at the hypoxanthine phosphoribosyltransferase and Na(+)/K(+) ATPase loci and compared to phenotypic transformations measured by changes in cellular morphology and colony formation in agar. Both cellular transformations had characteristics distinct from the somatic mutations observed at the two loci. Morphological transformation was observed after a time comparable to that of somatic mutation but at a frequency that was 25- to 540-fold higher. Transformants capable of colony formation in agar were detected at a frequency of 10(-5)-10(-6), but not until 32-75 population doublings after carcinogen treatment. Although this frequency of transformation is comparable to that of somatic mutation, the detection time required is much longer than the optimal expression time of conventionally studied somatic mutations. Neoplastic transformation of hamster embryo cells has been described as a multistep, progressive process. Various phenotypic transformations of cells after carcinogen treatment may represent different stages in this progressive transformation. The results are discussed in this context and the role of mutagenesis in the transition between various stages is considered. Neoplastic transformation may be initiated by a mutational change, but it cannot be described completely by a single gene mutational event involving a dominant, codominant, or X-linked recessive locus. Neoplastic transformation induced by chemical carcinogens is more complex than a single gene mutational process. Thus, this comparative study does not give experimental support to predictions of the carcinogenic potential of chemicals based on a simple extrapolation of the results obtained from conventional somatic mutation assays.