Mammalian type C retroviruses can be detected by their induction of foci of cell transformation in S+I - cells. We have noted that certain subtypes of the mouse xenotropic type C retrovirus (MuLV) inhibit this cell alteration. This inhibition, associated with intact virions, is irreversible and gives the infected cells a phenotype of uninfected cells. In comparison to the transformed cells, the inhibited cultures showed primarily a decrease in murine sarcoma virus (MSV) progeny production concomitant with a reduction in the MSV mos RNA expression. No difference in beta-actin RNA production was observed between the inhibited and transformed cultures. This selective effect of mouse xenotropic MuLV on MSV and mos RNA production in these cells focuses attention on the mechanism of transformation in this system.