Alveolar type-II cells were isolated from the lungs of fetuses (day 18 of gestation) of the A/WySnAf (A/Sn) mouse strain, which were treated in utero at day 15 with the directly-acting carcinogen N-ethyl-N-nitrosourea (ENU). The isolated type-II cells were again treated with ENU during their initial growth in vitro. After a prolonged culture period, 5 cell lines were obtained, which were identified as type-II cell lines. Differences between cell lines were found with respect to contact-inhibited growth, cell doubling time and ability to grow in a serum-free medium. Two out of the 5 cell lines produced highly invasive type-II cell carcinomas after s.c. injection of 5 x 10(6) cells into nude mice. Thus, both tumorigenic and non-tumorigenic mouse alveolar type-II cell lines were derived after this combined in vivo and in vitro carcinogen treatment of fetal mouse alveolar type-II cells. This offers the possibility of studying in vitro the factors thought to influence lung tumorigenesis in vivo. In addition, our findings strongly suggest that alveolar type-II cells are the progenitor cells of malignant mouse lung tumors.