The neoplastic transformation of cultured rat liver epithelial cells by various means has consistently been associated with the development of resistance to the mito-inhibitory effect of transforming growth factor beta (TGF-beta), suggesting that such phenotype plays a mechanistic role during the transformation of these cells. We have studied the induction of the "TGF-beta-resistant" phenotype in a clonal strain of early passage WB-F344 normal cultured rat liver epithelial cells, the proliferation of which was markedly inhibited by TGF-beta. The control WB cells in continuous culture slowly developed TGF-beta resistance. However, when the same cells were exposed to step-wise increases of TGF-beta concentration in their culture medium, the development of TGF-beta resistance was accelerated. Cells which had been grown in medium containing 1 ng/ml TGF-beta developed colony-forming capacity in soft agar containing epidermal growth factor. Cells which were grown in media containing 5 and 10 ng/ml TGF-beta demonstrated a low level of colony-forming efficiency in soft agar medium without added epidermal growth factor and tumorigenicity in isogeneic rats. These TGF-beta-resistant cells also exhibited progressively increasing levels of expression of the c-fos and and myc mRNA, and increased resistance to the cytotoxicity of Adriamycin and melphalan. The latter phenomenon was accompanied by an increase in the mdr-1 mRNA expression, cellular glutathione level, and glutathione S-transferase activity. The results suggest that chronic exposure to high concentration of TGF-beta promotes the spontaneous neoplastic transformation of cultured rat liver epithelial cells, and that this process may represent one of the mechanisms of cellular adaptation for induction of the multidrug-resistant phenotype during the carcinogenesis of epithelial cells.