We constructed a retroviral vector (pZSR) which is capable of simultaneously expressing the neomycin resistance gene and the viral ras oncogene. Primary mammary gland epithelial cells were prepared from mid-pregnant mice and infected with this virus. Cell lines with epithelial cell characteristics could be established with a low frequency. High expression of p21 v-ras was observed in these cells. They are tumorigenic and form soft agar colonies dependent on the presence of EGF and insulin in the growth medium but progress to hormone independent growth at higher passage numbers. A cloned cell line of non-tumorigenic, established mammary epithelial cells (NOG8) was also infected with the v-ras expressing virus. Individual cell clones expressing increasing amounts of p21 v-ras were selected. The level of p21 v-ras expression directly influences the morphology of the epithelial cells in culture, determines their cloning efficiency in soft agar and their tumorigenicity.