The serine/threonine protein kinase C (PKC) has been implicated in the regulation of drug resistance and cell survival in many types of cancer cells. However, the one or more precise mechanisms remain elusive. In this study, we have identified and determined the mechanism by which PKC-epsilon, a novel PKC isoform, modulates drug resistance in lung cancer cells. Western blot analysis demonstrates that expression of PKC-epsilon, but not other PKC isoforms, is associated with the chemo-resistant phenotype of non-small cell lung cancer (NSCLC) cell lines. Northern blotting and nuclear run-on transcription analysis further reveals that the failure of expression of PKC-epsilon in the chemo-sensitive phenotype of small cell lung cancer (SCLC) cells results from transcriptional inactivation of the gene. Importantly, forced expression of PKC-epsilon in NCI-H82 human SCLC cells confers a significant resistance to the chemotherapeutic drugs, etoposide and doxorubicin. Resistance is characterized by a significant reduction in apoptosis in PKC-epsilon-expressing cells. Treatment of NCI-H82 cells with etoposide induces a series of time-dependent events, including the release of cytochrome c from the mitochondria to the cytosol, activation of caspase-9 and caspase-3, and cleavage of poly(ADP-ribose) polymerase (PARP). All of these events are blocked by PKC-epsilon expression. Furthermore, caspase-specific inhibitors, z-VAD-fmk and z-DEVD-fmk, significantly attenuate the accumulation of sub-G(1) population and block the PARP cleavage in response to etoposide. These results suggest that PKC-epsilon prevents cells from undergoing apoptosis through inhibition of the mitochondrial-dependent caspase activation, thereby leading to cell survival. Finally, down-regulation of PKC-epsilon expression by the antisense cDNA in NSCLC cells results in increased sensitivity to etoposide. Taken together, our findings suggest an important role for PKC-epsilon in regulating survival of lung cancer cells.