Reverse transformation (RT) presents a challenge in understanding of the role of protein-genome interaction in regulating gene expression in normal and transformed cells. Early during RT of CHO-K1 cells by cyclic AMP a new protein, mol wt = 43,000 and pI = 5.3 +/- 0.2, was rapidly and specifically induced. This cAMP-induced protein (CIP) is a phosphorylated actin homolog. Induction required new protein synthesis. Actinomycin D treatment failed to inhibit CIP induction, suggesting the existence of an untranslated or sequestered mRNA in untreated cells. Expression of CIP was not dependent upon cell shape or cytoskeletal integrity as are other steps in RT. CIP was detectable only in cAMP-treated cells, whether transformed or nontransformed, and cAMP treatment inhibited growth of both cell types. CIP was associated with soluble cell fractions and not with F-actin. We propose that CIP plays an early role in RT, that is necessary but not sufficient for the complete RT process, and that it participates in the cAMP signaling pathway of cells through changes in the cytoskeleton. This pathway inhibits cell growth as required in the differentiated phenotype. A molecular model is presented for the RT reaction in CHO-K1, which also explains cAMP effects on transformed cells such as the S49 lymphoma and other malignancies.