A method has been devised whereby the transplanted epidermis of mouse embryos can be selectively exposed to the action of a chemical carcinogen. Scharlach R was dissolved in olive oil with the aim of stimulating and attracting the epidermal cells, methylcholanthrene was added to the solution, and numerous fine globules of it were injected into the thigh muscles of adult mice together with fragments of embryo skin. Much of the oil underwent primary inclusion in the resulting cysts, and the proliferating epidermis, while forming them, extended to not a few of the outlying droplets with result that they too were added to the cyst contents. During these activities the methylcholanthrene came into direct contact with many of the epithelial cells, and later on the layer lining the cyst was continually exposed to the influence of the carcinogen. The epidermis underwent neoplastic changes with great rapidity; often in less than 4 weeks papillomas and carcinomas had arisen like those deriving from adult epidermis. The growths were punctate in origin and usually multiple. Many were transplanted to adults of the same homologous breed of mice that furnished the embryo material (mice of C strain). The grafts did not uniformly succeed as was the case with those of normal skin of embryos of the same stock,-which regularly grew at first in the new hosts and remained alive long after. The benign papillomas failed to live or barely survived, and the apparently malignant papillomas, though rapidly forming nodules of considerable size, usually regressed later. Some of the carcinomas also regressed or wholly failed, while others gave rise to progressively enlarging tumors. The best results were obtained with grafts in which several neoplasms were intermingled, these flourishing together in the new hosts. Methylcholanthrene in olive oil exerts an influence on epidermal cells like that of Scharlach R, stimulating them to multiply, attracting them, and causing them to mimic carcinomatous elements.