A pyrazolo-quinoline compound, 6-methoxy-4-[2-[(2-hydroxyethoxyl)-ethyl]amino]-3-methyl-1M-pyrazo lo [3,4-b]quinoline (SCH 51344), was identified based on its ability to derepress human smooth muscle alpha-actin promoter activity in ras-transformed cells. In this study, we show that SCH 51344 reverts several key aspects of ras transformation, such as morphological changes, actin filament organization, and anchorage-independent growth, and also inhibits Val-12 Ras-induced maturation of Xenopus oocytes. SCH 51344 is also a potent inhibitor of the anchorage-independent growth of human tumor lines known to contain multiple genetic alterations in addition to activated ras genes. We have sought to determine whether SCH 51344 disrupts the signaling pathway that activates mitogen-activated protein (MAP) kinase or extracellular signal-regulated kinase (ERK) in normal and ras-transformed fibroblast cells. NIH 3T3 cells transformed by different oncogenes, which have products that participate at different steps of the Ras signaling pathway, were tested in a soft-agar colony formation assay to determine which step of the pathway is inhibited by SCH 51344. Our results indicate that SCH 51344 inhibits the ability of v-abl, v-mos, H-ras, v-raf, and mutant active MAP kinase kinase-transformed NIH 3T3 cells to grow in soft agar. Only v-fos-transformed cells were found to be resistant to the treatment of SCH 51344. SCH 51344 treatment had very little effect, if any, on the activation of MAP kinase kinase, MAP kinase, and p90RSK activity in response to growth factor stimulation. Treatment of ras-transformed cells with SCH 51344 led to stimulation of serum response factor DNA binding activity and activation of serum response element-dependent gene transcription, accounting for its ability to activate alpha-actin promoter activity in ras-transformed cells. Our results indicate that SCH 51344 inhibits ras transformation by a novel mechanism and acts at a point either downstream or parallel to extracellular signal-regulated kinase-dependent Ras signaling pathway.