Cloned and uncloned epithelial cultures were established from the liver of a 3-week-old AS rat. These epithelial cultures were neither tumorigenic nor did they display anchorage-independent growth. One of the clones was cytogenetically normal after 53 in vitro passages (approximately 200 population doublings after cloning). Eight transformed lines were isolated from the liver epithelial cells after infection with adenovirus type 12 (Ad-12). Five of these produced typical Ad12 T-antigen, whereas three appeared to be T-antigen-negative. All were tumorigenic in newborn syngeneic rats. The T-antigen-positive transformed lines produced anaplastic-epithelial tumors, whereas the T-antigen-negative transformed lines produced adenocarcinomas. Although all the transformed lines were tumorigenic, some were fibronectin-positive while others produced no detectable fibronectin. The normal (untransformed) epithelial cells produced fibronectin. These results are interesting for two reasons: (1) there are relatively few reports of fibronectin on epithelial cells and (2) they emphasize the view that there is no absolute correlation between reduced fibronectin and tumorigenicity in transformed cells. The transformed lines displayed in vitro characteristics similar to those of transformants derived from embryonic and fibroblastic cell strains, notably, increased saturation density and changes in cellular morphology. Some of the transformed cell lines, but not all, displayed anchorage-independent growth. All the transformed cell lines were picked from multi-layered foci so that morphological criteria (i.e. piling-up focus) for isolating transformants from the epithelial cultures were similar as in embryonic and fibroblastic transforming cell systems. With the new cell system we have developed we can, using the same epithelial cell line (clone C3), study both virus transformation and virus mutagenesis.