An in vitro hematopoietic microenvironment was established from explained fragments of bone marrow from adult noninbred NIH Swiss mice with the use of corticosteroid-reconstituted horse serum. Infection with Kirsten murine sarcoma virus (Ki-MuSV) with either a Rauscher murine leukemia virus (R-MuLV) or Balb:virus-1 helper virus coat reduced proliferation of granulocytic and pluripotent hematopoietic stem cells and produced neoplastic transformation of both macrophages and preadipocytes in the adherent cell population within a 4-week period. Ki-MuSV-transformed, virus-releasing macrophages formed clusters of 4-49 cells in 0.8% methylcellulose-containing medium in the absence of added colony-stimulating factor (CSF), synthesized lysozyme, ASD-chloroacetate substrate-specific esterase-M, and CSF, and produced tumors following inoculation iv into adult NIH Swiss mice or ip into newborn NIH Swiss mice. In cultures infected with helper leukemia viruses R-MuLV or Balb:virus-1, gradual transformation of a distinct cell phenotype was observed over a 9-week period with generation of increasing numbers of atypical myeloblasts and promyelocytes which showed dyssynchronous nuclear-cytoplasmic maturation, basophilic granulation, cytoplasmic vacuolation, and formation of incompletely maturing CSF-dependent granulocyte-macrophage colonies in vitro and small spleen colonies in vivo. These data demonstrated that rapid biologic expression of the murine sarcoma virus genome in specific adherent "stromal" marrow cells prevents detection of a more subtle helper-virus-induced dysmyelopoiesis in a distinct nonadherent cell population.