Studies on mechanisms of neoplastic development in airway epithelial cells are being conducted with the aim to characterize pre-neoplastic epithelial cell variants on both the cellular and molecular level. By investigating important modulators of neoplastic progression, we hope to elucidate its cellular and biochemical basis. An analysis of cell populations of transformed rat tracheal epithelial (RTE) cells indicates that transformed stem cells produce large numbers of cells not exhibiting transformed growth characteristics. Studies on the role of the anchorage independent (ag+) phenotype in neoplastic transformation of RTE cells indicates that ag+ cell variants are being generated in preneoplastic RTE cell populations at a rate of about 10 to the -4 per cell, per cell generation and that the ag+ phenotype may not be an obligatory step in neoplastic transformation of RTE cells. Chromosomal analyses of RTE cell transformants suggest that spontaneous and induced transformants have similar qualitative and quantitative chromosomal changes which might be important in the establishment of the EG-variant phenotype. The tumor promoter TPA does not increase the frequency of the EG-variant phenotype but it may enhance the development of ag+ phenotype in some but not other preneoplastic RTE cell clones. Retinoic acid inhibits RTE cell transformation at concentrations which are not inhibitory for growth of normal RTE cells. Whether RA inhibits the clonal expansion or the expression of RTE cell transformation is under study.