Infection of normal human melanocyte and nevus cultures with an adenovirus 12-Simian Virus 40 hybrid virus (Ad12-SV40) produced transformed cells that expressed SV40-T antigen. The Ad12-SV40 cells exhibited rapid cell proliferation to high cell densities and efficient growth in soft agar, but none of 15 transformed melanocyte and nevus cultures formed tumors when injected s.c. or under the renal capsule into athymic nude mice. While the Ad12-SV40-transformed cells lost certain properties associated with the melanocytic phenotype, i.e., pigmentation, tyrosinase activity and melanosome content, the expression of melanoma-associated antigens, including nerve growth factor receptor, p97 melano-transferrin, and chondroitin sulfate proteoglycan, remained stable. The transformed melanocytes acquired the ability to express HLA-DR antigen, which is found on nevus and melanoma cells. Total ganglioside patterns in Ad12-SV40-transformed cells changed to reflect more advanced stages of tumor progression. Transformed melanocytes, like nevus and melanoma cells, showed increased GD3 content and transformed nevus cells increased GD2 which is a feature of malignant melanoma cells. Ad12-SV40-transformed human melanocytes and nevus cells are useful tools for studying tumor progression under experimental conditions.