Tumor-promoting or antipromoting agents potentially may act directly on initiated squamous epithelial cells or indirectly through effects on normal keratinocytes or immune cells. The purpose of this study was to examine direct effects by comparing in vitro and in vivo treatment of initiated cell populations with 12-O-tetradecanoylphorbol-13-acetate (TPA) or retinoic acid. Keratinocytes were initiated by treatment in vitro with 7,12-dimethylbenz[alpha]anthracene. Replicate cultures of a cloned initiated cell line were exposed to TPA or retinoic acid with acetone as control. After an equivalent number of population doublings, cultured cell sheets were transplanted as skin grafts to athymic nude mice. Replicate grafts from each in vitro treatment group were then treated with TPA or retinoic acid for 8 months. Promotion was quantified by tumor incidence (graft sites with tumor per total sites) and by tumor growth rate. The findings were as follows: (a) TPA increased tumor incidence whether it was applied in vitro or in vivo; (b) TPA in vitro favored more progressive tumors than TPA in vivo; (c) stages of malignant progression from cloned keratinocytes treated in vitro were histologically identical to those following treatment of skin in vivo, including papilloma, dysplastic invasive papilloma, squamous cell carcinoma, and metastasis to lymph node and lung; (d) retinoic acid treatment in vivo reduced tumor incidence and tumor growth rate in initiated cells previously exposed to TPA but not in cells previously exposed to retinoic acid. The results indicated the following: (a) direct effects of TPA on initiated keratinocyte populations were a significant component of tumor promotion; (b) factors in vivo modified the TPA response toward less progressive growth; and (c) the effect of retinoic acid was modulated by prior treatment history.