Protein kinase C (PKC) is a key component in signal transduction in eucaryotic cells and when specific PKC isoforms are over-expressed in immortal mammalian cells they can induce transformation-associated properties. In the present study we demonstrate that a cloned PKC beta 1 gene can induce an enhanced expression of the transformed phenotype in type 5 adenovirus (Ad5)-transformed rat embryo (RE) cells (clone E11), a process termed transformation progression. E11 cells expressing the PKC beta 1 gene, clone B1/PKC, produce PKC beta 1 mRNA and display enhanced PKC enzymatic activity and binding of [3H]-phorbol-12,13-dibutyrate (PDBu) to cell surface phorbol ester receptors. B1/PKC cells grow with increased efficiency in agar in comparison with parental E11 cells and anchorage-independence is further enhanced in both cell types by addition of the tumor promoting agent 12-0-tetradecanoyl-phorbol-13-acetate (TPA). A single-exposure of B1/PKC cells to 5-azacytidine (AZA), followed by growth in the absence of this demethylating agent, results in B1/PKC-AZA clones which display a stable reversion of the progression phenotype to that of the unprogressed parental E11 clone. Loss of the progression phenotype corresponds with a reduction in PKC beta 1-induced biochemical and cellular changes. In contrast, progression-suppression does not involve an alteration in expression of the Ad5 transforming genes, E1A and E1B, or the endogenous PKC epsilon gene. TPA cannot induce the progression phenotype in B1/PKC-AZA cells, but it can reversibly induce an increase in the transcriptional rate and steady-state mRNA levels of PKC beta 1 and c-jun and it increases AP-1 DNA-binding. These results indicate that the PKC beta 1 gene can serve as a transformation progression-inducing gene in rat embryo cells previously transformed by Ad5 and progression may be mediated by the inactivation by methylation of an AZA-sensitive 'progression suppressor gene(s)'. The suppression process in B1/PKC cells is independent of expression of the Ad5-transforming genes but correlates directly with the reduced expression of the transfected PKC beta 1 gene in AZA-treated B1/PKC cells.