Carcinogenesis is a multistep process that results from the development of a variety of defects in the control of differentiation and proliferation. To investigate this concept further, 3T3 T mesenchymal stems cells were employed to establish that a distinct sequence of biological processes is involved in the control of differentiation and proliferation, and that these processes are integrally regulated. Specific defects in these regulatory processes were next established as being involved in carcinogenesis. These defects, however, were found not to be absolute; rather, they appear to involve changes in the stringency by which differentiation and proliferation are integrally regulated. Finally, it was established that when normal or transformed stem cells are induced to undergo nonterminal differentiation (which is one step in the integrated control of proliferation and differentiation), they can be made resistant to carcinogenesis or to revert to a nontransformed state. These data provide strong evidence that a critically important requirement for normal homeostasis is maintenance of intact cellular mechanisms to integrally regulate differentiation and proliferation.