Enhancing factor (EF), a growth factor modulator, is the mouse homologue of human secretory group II phospholipase A(2). EF exhibits growth-promoting activity in vitro, in the presence of epidermal growth factor, and also brings about phenotypic transformation of normal cells. In order to ascertain the role of EF in vivo, a human keratin-14 promoter was used to drive the expression of EF ectopically to squamous epithelial cells. The founder mouse and its progeny showed abnormal whiskers and a scaly, beaded tail. In these mice, keratinization pattern of the epidermis was disturbed and parakeratosis and acanthosis were noted. The transgenic mice, TgK14-EF, expressed EF in the suprabasal layers of tail epidermis as well as in the epithelial cells of hair follicle and sebaceous glands of skin. Expression of EF along with hyperplasia was also observed in other squamous epithelia such as buccal mucosa, tongue and oesophagus. TgK14-EF mice homozygous for the transgene showed delayed and scanty hair growth although the mice were healthy and fertile. The hemizygous TgK14-EF mice were sensitive to a two-stage chemical carcinogenesis and developed a higher number of papillomas than their normal littermates over the course of the experiment. The conversion rate of papilloma to carcinoma was two fold higher in the transgenic mice.