We have developed an efficient in vitro transformation system using N-methyl-N-nitrosourea that allows us to study the role of hormones and growth factors in mouse mammary tumorigenesis. Utilizing this system, we reported earlier that mammary tumors induced in vitro with N-methyl-N-nitrosourea in the presence of mammogenic hormones (progesterone and prolactin) contain predominately an activated c-Ki-ras protooncogene with a G35 --> A35 transitional mutation in the 12th codon. Mammary tumors induced in the presence of another mitogen, lithium (Li), do not have a mutation in the c-Ki-ras protooncogene. By using an expression cloning system, a plasmid clone containing a 1.75-kb cDNA insert has been isolated from this group of tumors. Nucleic acid sequence analysis of the insert reveals that it has a short open reading frame of 61 amino acids and that it does not have sequence homology with any known gene. The gene, designated MAT1, can neoplastically transform NIH 3T3 cells and also the mammary epithelial cell line TM3. Expression of this gene occurs in normal mouse tissues including mammary gland and is overexpressed in the original mammary tumors as indicated by Northern blot analysis. In vitro transcription and translation of the clone shows a protein product of 6000 Da, which agrees with the predicted open reading frame.