Embryonic stem (ES) cells were used to investigate the target cell specificity and consequences of c-fos when expressed ectopically during embryonic development. Chimeric mice generated with different ES cell clones selected for high exogenous c-fos expression were not affected during embryonic development; however, a high frequency of cartilage tumours developed as early as 3-4 weeks of age apparently independent of the extent of chimerism. The tumours originated from cartilagenous tissues and contained many chondrocytes. Expression of exogenous c-fos RNA and Fos protein was observed during development but was highest in tumour tissues, predominantly in differentiating chondrocytes. A number of primary and clonal tumour-derived cell lines were established which expressed high levels of c-fos, c-jun as well as the cartilage-specific gene type II collagen and which gave rise to cartilage tumours in vivo, some of which also contained bone. Interestingly, the levels of c-Fos and c-Jun appeared to be coordinately regulated in the cell lines as well as in chimeric tissues. Thus, we demonstrate that chondrogenic cells and earlier progenitors are specially transformed by Fos/Jun and therefore represent a novel mesenchymal target cell for c-fos overexpression.