A histogenetic study was designed to evaluate controversial findings on the cell of origin of tubular/papillary lung tumors in mice, i.e., bronchiolar Clara cell versus alveolar type II cell. N-Nitrosoethylurea (0.5 mmol or 0.74 mmol/kg) was given to pregnant C3H (C3H/HeNCr MTV-) and Swiss Webster [Tac:(SW)fBR] mice as a single i.p. injection on Day 14, 15, 16, or 18 of gestation. The offspring were studied at various ages ranging from 7 days to 52 wk. Serial sections of the whole lung (100 to 200 sections per mouse) showed that solid/alveolar and papillary tumors arose from the pulmonary acinus, invading the bronchioles only as the tumors grew. Furthermore, a mixture of solid and papillary patterns within a single module did not represent a merging of two tumors but a progression from the solid to the papillary form. By use of two rabbit antisera against mouse lung surfactant apoproteins found in normal alveolar type II cells, it was shown by the avidin-biotin peroxidase complex procedure, by the peroxidase-antiperoxidase technique, and by indirect immunofluorescence that both solid and papillary tumors contained these proteins that are specific markers for alveolar type II cells. With a rabbit anti-rat Clara cell antiserum, none of the tumors studied was immunoreactive while normal Clara cells were reactive. The nitroblue tetrazolium formazan stain for dehydrogenase enzymes, found particularly in Clara cells, did not reveal these enzymes in any lung tumors from either strain. Ultrastructurally, no typical features of the mature Clara cell were detected in papillary or other pulmonary neoplasms. However, all tumors showed characteristic alveolar type II cell structures such as various stages of lamellar body formation, although these features were less well differentiated in the papillary tumors. Argentaffin dense bodies, representing lysosomes and immature forms of lamellar bodies, were commonly observed in papillary tumors. Some features of the papillary tumors such as cell shape, high glycogen content, and primary cilia were equivalent to those seen in pulmonary epithelial precursor cells during fetal development. With age, the papillary tumors became invasive, accumulated neutral lipids, and developed bizarre cleaved nuclei and lamellated nuclear pseudoinclusions. In conclusion, the papillary lung tumors of the mouse, at least those induced transplacentally by N-nitrosoethylurea, constitute less well-differentiated or poorly differentiated alveolar type II cell adenomas or carcinomas with fetal morphological and biochemical properties.