Two clonal A-MuLV lymphoma cell lines have the capacity to generate phenotypic variants when grown in vivo as ascites tumors. Variant lines differed from parental lymphoma cells in their expression of enzymatic or cell surface differentiation markers. Parental lines expressed the B220 and Lyb-2 glycoproteins characteristic of pre-B cells and bound B220-specific monoclonal antibodies such as 14.8. The parental cells expressed low levels of TdT activity but did not synthesize detectable mu-heavy chain, a cellular phenotype that may correspond to lymphoid progenitor cells. Three classes of phenotypic variants were recovered from the Thy-1- parental lines: 1) 14.8+, Lyt-1+, Thy-1- cells; 2) 14.8 +/-, Lyt-1+, Thy-1+ cells, and 3) 14.8-, Lyt-1+, Thy-1+ cells. Cell cloning experiments indicated that Thy-1+ variant cells can be recovered within 14 days of in vivo inoculation as a minor proportion (1/10(6] of the tumor cell population and subsequently become the predominant tumor cell population. These clonal tumor lines provide a model for the study of cellular and molecular alterations that occur during neoplastic differentiation and progression in the lymphoid system.