Immortalized, but nontumorigenic, human keratinocyte cell lines have many potential therapeutic and experimental uses. We have utilized a recombinant retrovirus, encoding the simian virus 40 large T-antigen, to immortalize normal human epidermal keratinocytes. The KER-1 cells derived from the immortalization process grow without feeder layer support, but do not form colonies in soft agar. Morphologically, the KER-1 cells appear similar to nonimmortalized cells, except that stratification is somewhat reduced. The pattern of keratin gene expression in nonimmortalized and KER-1 cells is similar, except for the retinoid-dependent regulation of type I cytokeratin, K7, in the KER-1 cells. This keratin is not expressed in nonimmortalized keratinocytes, but is present at low levels in KER-1 cells. Incubation with trans-retinoic acid (20 or 200 nM) or retinol (200 or 2000 nM) results in a 40-fold increase in K7 expression in KER-1 cells. The cornified envelope precursor, involucrin, is expressed at normal levels in KER-1 cells. Moreover, as in nonimmortalized cells, KER-1 involucrin levels are not suppressed by retinoids. trans-Retinoic acid and retinol reduce envelope formation in both nonimmortalized keratinocytes and KER-1 cells. Surprisingly, the synthetic retinoid, Ro 13-6298 (p [(E)-2-(5,6,7,8-tetrahydro-5,5,8,8-tetramethyl-2- naphthyl)-propenyl]benzoic acid ethyl ester), a potent regulator of keratin gene expression, cornified envelope formation and morphological change in nonimmortalized cells, is completely inactive in KER-1 cells.