Smokeless tobacco (ST) usage is a growing public health problem worldwide. Exposure to smokeless tobacco is carcinogenic to humans. The molecular mechanism(s) underlying ST associated oral carcinogenesis remain largely unknown. The major challenge is to identify the key factor(s) involved in malignant transformation of oral lesions. Knowledge of these factors will provide candidate diagnostic biomarkers and targets for early intervention. To identify the molecular targets in ST associated oral lesions, we established and purified cultures of epithelial cells (AMOL-III) from an oral leukoplakia with histological evidence of hyperplasia with hyperkeratosis from gingivo-buccal sulcus of a smokeless tobacco (khaini) consumer. Cell cultures were characterized and modulation of gene expression in response to smokeless tobacco extract (STE) was investigated using confocal microscopy and immunoblotting. AMOL-III cells showed altered expression of cell cycle regulators namely p53, p21waf1/cip1, hdm2, proliferation marker Ki67 and transcription factor Ets-1. These cells did not harbor HPV 16/18. No mutation was detected in H-Ras codon 12/13 or in p53 exons 5-9 in AMOL-III cells. STE treatment of these cells resulted in loss of pRb, RARbeta, p21 waf1/cip1 and O6-methyl guanine-DNA methyl transferase (MGMT) while the expression of cyclin D1 was increased. To our knowledge this is the first report to demonstrate that khaini modulates expression of multiple cellular targets including proteins involved in cell cycle regulation and DNA methylation, which may lead the oral epithelial cells down the carcinogenic pathway. This in vitro model system assumes importance in unraveling the cellular and molecular mechanisms implicated in smokeless tobacco associated early oral cancer progression.