Retinal melanoblasts were transformed by a temperature-sensitive mutant of Rous sarcoma virus (ts-RSV). At the permissive temperature for transformation, the cells cease melanin synthesis, degrade their melanosomes and release much of their accumulated melanin into the medium. At the nonpermissive temperature, the cells assume an epithelioid morphology, actively synthesize melanin and become difficult to distinguish from normal uninfected control cultures. Both the transformed phenotype and the differentiated cell phenotype are temperature-dependent. Infected retinal melanoblasts which are incubated at the nonpermissive temperature and which accumulate a large amount of melanin are unable to transform in response to a temperature shift; instead, the cells degenerate and die. Retinal melanoblasts can be infected by subgroups A, B, C and D of RSV; however, their level of susceptibility to infection is about 1/40 compared to fibroblasts. Cultures infected by ts-RSV produce virus at both temperatures, suggesting that cell phenotype does not regulate virus synthesis.