We have shown previously that chronic low-dose arsenic exposure induces malignant transformation of human skin keratinocyte HaCaT cells. In this study, we found that several isoforms of aldo-keto reductase 1C (AKR1C) were overexpressed in arsenic-exposed HaCaT cells. The AKR1C family of proteins are phase I drug-metabolizing enzymes involved in maintenance of steroid homeostasis, prostaglandin metabolism and metabolic activation of polycyclic aromatic hydrocarbons. To explore the oncogenic potential of AKR1C isoforms, we established mouse NIH3T3 cell lines ectopically and stably expressing human AKR1C1, AKR1C2 or AKR1C3. Our results showed that ectopic expression of human AKR1C1 and AKR1C2, but not AKR1C3, significantly enhanced foci formation. Following subcutaneous injection of these stable cell lines into nude mice, fibrosarcoma were formed from all three cell lines. However, the number and size of tumors formed by the AKR1C3-expressing cell line was fewer and smaller, respectively, than those formed by AKR1C1- and AKR1C2-expressing cells. Inhibitors of AKR1C, genistein and ursodeoxycholic acid, decreased foci formation in AKR1C1- and AKR1C2-expressing NIH3T3 cells in a dose-dependent manner, implying the association of enzymatic activity and oncogenic potential of AKR1C. The requirement of enzymatic ability for neoplastic transformation was confirmed by establishing a NIH3T3 cell line stably expressing a mutant AKR1C1 lacking enzymatic activity, which did not form foci in culture or tumors in nude mice. Our present study reveals that AKR1C enzymatic activity plays crucial roles on induction of neoplastic transformation of mouse NIH3T3 cells.