A human anaplastic gastric cancer cell line, HGC-27, showed marked degeneration with formation of multinucleated syncytia and cell detachment of nearly all cells which began 24 hr after and reached a maximum 2 to 3 days after co-cultivation with X-irradiated MT-2 cells, HTLV-I producing human cord leukocytes. Less severe degeneration without formation of syncytia was also observed in the cultures inoculated with cell-free MT-2 culture media. Morphologically altered cells began to proliferate and formed piled up colonies in some of the cultures co-cultivated with X-irradiated MT-2 cells after a long culture period. The two clones designated HGC/MT2 (Cl-1) and HGC/MT2 (Cl-2) were separated by cell cloning. HGC/MT2 (Cl-1) and HGC/MT2 (Cl-2) cells were positive for HTLV-I gag proteins (p19 and p24) and pX gene products, p40x, as demonstrated by immunohistochemistry and immunoblotting analysis, contained HTLV-I provirus DNA, and consistently produced type C virus particles.