Okadaic acid is a non-phorbol 12-myristate 13-acetate (PMA)-type tumor promoter on mouse skin and known to be a potent inhibitor of serine/threonine protein phosphatases. Contrary to expectation from its tumor-promoting activity, okadaic acid was shown to have a potential to revert the phenotypes of cells transformed by raf and ret-II to that of normal cells. Two to 3 days after addition of 8 ng of okadaic acid per ml to the culture medium, raf and ret-II transformants changed to flat cells and gained contact inhibition. The amount of fibronectin, which was decreased in malignant transformed cells, was increased in the flat revertants. Moreover, okadaic acid caused a dose-dependent loss of ability to grow in soft agar. The morphology of the cells reverted to malignant phenotype within 1 week after removal of okadaic acid. The levels of mRNA and protein of activated c-raf in flat revertants were similar to those in parental transformed cells. The level of mRNA of ret-II was also not changed by flat reversion. No induction of flat reversion was observed with okadaic acid tetramethyl ether, an inactive compound, or a phorbol ester, PMA. As okadaic acid is a potent inhibitor of protein phosphatases 1 and 2A, the possibility that these phosphatases are involved in signal transduction from the raf and ret-II oncogenes is suggested.