Allelic loss at the short arm of chromosome 3 is one of the most common and earliest events in the pathogenesis of lung cancer, and is observed in more than 90% of small-cell lung cancers (SCLCs) and in 50-80% of non-small-cell lung cancers (NSCLCs). Frequent and early loss of heterozygosity and the presence of homozygous deletions suggested a critical role of the region 3p21.3 in tumorigenesis and a region of common homozygous deletion in 3p21.3 was narrowed to 120 kb (ref. 5). Several putative tumour-suppressor genes located at 3p21 have been characterized, but none of these genes appear to be altered in lung cancer. Here we describe the cloning and characterization of a human RAS effector homologue (RASSF1) located in the 120-kb region of minimal homozygous deletion. We identified three transcripts, A, B and C, derived from alternative splicing and promoter usage. The major transcripts A and C were expressed in all normal tissues. Transcript A was missing in all SCLC cell lines analysed and in several other cancer cell lines. Loss of expression was correlated with methylation of the CpG-island promoter sequence of RASSF1A. The promoter was highly methylated in 24 of 60 (40%) primary lung tumours, and 4 of 41 tumours analysed carried missense mutations. Re-expression of transcript A in lung carcinoma cells reduced colony formation, suppressed anchorage-independent growth and inhibited tumour formation in nude mice. These characteristics indicate a potential role for RASSF1A as a lung tumour suppressor gene.