We evaluated induction of lymphomas by the methylating carcinogen, N-methylnitrosourea [MNU], in transgenic mice expressing both LMO1 and the DNA repair gene, MGMT, in the thymus. The goal was to determine whether environmental mutagens shorten the latency or increase the incidence of LMO1 + lymphomas and whether mice transgenic for both LMO1 and MGMT, and thereby able to repair O6-methylguanine DNA adducts induced by MNU, would be protected. Mice heterozygous for LMO1 or MGMT were crossed and offspring treated with MNU at 6 weeks of age. MNU induced lymphoma incidence was highest in the LMO1 mice, 91% and lowest in the hMGMT + mice, 15%. MNU induced K-ras mutations in codon 12 in non-MGMT transgenics resulted in a shorter latency of tumors and accounting for half of the early lymphomas in LMO1 mice. The effect of MNU was abrogated in the LMO1/hMGMT transgenic mice, indicating the ability of MGMT expression to block the carcinogenic effect of MNU even in cancer prone mice. Thus, methylating agents potentiate lymphomagenesis of LMO1, in part through activation of K-ras and the MAPK pathway, a process which appear to synergize with LMO1 mediated transcription activation. O6-alkylguanine DNA-alkyltransferase mediated DNA repair effectively blocks chemical carcinogenesis in mice carrying the LMO1 oncogene.