The expression of the c-myc gene has previously been shown to be elevated and deregulated in the human hepatoma cell line Hep G2 (B. E. Huber and S. S. Thorgeirsson, Cancer Res., 47: 3414-3420, 1987). We now report that the Hep G2 N-ras gene is activated to a dominant-acting, transforming gene by a missense mutation in codon 61. Hep G2 DNA produced transformed foci when transfected into NIH 3T3 cells. Subsequent to a secondary round of transfection, Southern blot analysis of tumorigenic NIH 3T3 foci demonstrated the presence of human N-ras sequences. Nucleotide sequence analysis of one Hep G2 N-ras allele demonstrated that codons 12, 13, and 59 were normal and that codon 61 had a missense mutation (CAA to CTA). This mutation results in the incorporation of leucine instead of glutamine at residue 61 of the N-ras gene product, p21. N-ras sequences were amplified by the polymerase chain reaction from both Hep G2 genomic DNA and Hep G2 complementary DNA. Analysis of the amplified sequences demonstrated that only one Hep G2 N-ras allele exhibited the codon 61 mutation and that both the mutant and normal alleles were transcribed. Northern blot analysis demonstrated equivalent steady-state levels of N-ras transcripts in Hep G2 cells and normal human liver. The steady-state levels of N-ras and ornithine decarboxylase transcripts were positively correlated suggesting a positive relationship between N-ras expression and the replication rate of Hep G2 cells. c-Ki-ras and c-Ha-ras transcripts were not detected in either Hep G2 cells or normal human liver. Immunoprecipitation experiments using the monoclonal antibody Y13-259 demonstrated the presence of p21 in Hep G2 cells. Expression of a dominant-acting, transforming N-ras gene, in conjunction with the altered regulation of the c-myc gene, documents two important genetic lesions that could be responsible for the transformed phenotype of Hep G2 cells.