A quantitative in vitro transformation assay has been developed for the first time using primary rat kidney epithelial (RKE) cells. RKE cells were grown in a 50:50 mixture of 3T3 conditioned medium and DF8 medium composed of Ham's F-12/DMEM supplemented with ferrous sulfate, vasopressin, triiodothyronine, insulin, cholesterol, hydrocortisone, transferrin, sodium selenite and 10% fetal bovine serum. Colony forming efficiency of cells plated in this medium was high, ranging from 2.4 to 16%. Normal RKE cells treated with N-methyl-N'-nitro-N-nitrosoguanidine (MNNG) became transformed to a preneoplastic state of enhanced in vitro growth potential and formed large colonies of morphologically altered cells, whereas RKE cells treated with vehicle alone ceased proliferating and/or sloughed off the dish within 4–6 weeks. Relative survival and percent transformation frequency (Tt) of RKE cells exposed to MNNG were inversely proportional and both were dose dependent. MNNG concentration of 0.5, 1.0 and 2.0 μg/ml resulted in transformation frequencies of 0.13, 0.37 and 1.1% respectively (n = 4). Morphologically transformed colonies gave rise to cell lines with indefinite growth capacity and neoplastic potential. One of six transformed RKE cell (TRKE) lines injected into nude mice produced adenocarcinomas. This assay represents the first in vitro model for studying mechanisms of chemical transformation of normal kidney epithelial cells and may also be useful as a screen for identifying potential renal carcinogens.