Contact inhibition of growth is the property in vitro whose loss is most closely correlated with tumorigenicity in vivo. A contact-inhibited melanocytic cell line produces a diffusible protein-containing factor capable of restoring contact inhibition of cell division to highly malignant hamster melanocytes. Its addition to subconfluent cultures of the malignant cells is followed by the obligatory acquisition, at confluence, of the contact-inhibited state. Cultures are flat, oriented, and fibroblast-like, and show a 55% decrease in saturation density with no loss of viability. The effect is reversible. Present in conditioned media of cultures of the contact-inhibited melanocytic cell line, isolated by column chromatography on Sephadex G-200, the factor appears to be of high molecular weight. Activity is preserved in aqueous solutions at 4 degrees for at least 8 weeks, but is destroyed by repeated freezethawing or by treatment with Pronase. This newly recognized contact-inhibitory factor may be a prototype for a more general and fundamental mechanism for regulation of normal cell-cell interactions. It is the first cell-elaborated factor to be isolated that is capable of restoring the capacity for contact inhibition of growth to malignant cells.