Expression of an activated human c-H-ras oncogene under control of rat elastase I regulating elements leads to neoplasia of the fetal exocrine pancreas. In most transgenic mice bearing this gene construct, massive tumors involving all the pancreatic acinar cells develop within a few days of pancreatic differentiation. Expression of the normal c-H-ras proto-oncogene in acinar cells leads to more subtle anomalies, but no tumors develop. Thus modest amounts of the mutant ras proteins are sufficient, in an otherwise normal genetic background, to lead to neoplastic transformation of differentiating pancreatic acinar cells. In contrast, a comparable elastase-myc construct produces no pancreatic tumors in transgenic mice.