The development of human cancer is a complex process which has been difficult to define in vivo. The use of animal models of human cancer may prove useful in elucidating the mechanisms associated with malignant transformation. Transgenic mice with either the adenovirus 12 (Ad12) E1a/E1b genes or the human hepatitis B virus (HBV) HBx gene were developed. Expression of these viral genes resulted in the development of malignant tumors in restricted tissues; in the case of the HBx transgenic mice, hepatocellular carcinomas and in the E1a/E1b transgenic mice, gastric carcinomas. With the E1a/E1b transgenic mice, tumors were found to arise near the junction between the squamous and columnar epithelia, as found in several human cancers, including cervical and esophageal carcinomas, and thus appear to be an ideal animal model for determining why the squamocolumnar junction is such a hot spot for the development of human tumors of epithelial derivation. The HBx transgenic mice showed progressive changes in the liver, beginning with preneoplastic lesions, through benign adenomas, and finally to malignant carcinomas. These mice appear particularly suited for defining epigenetic rather than genetic events underlying the progression of human cancers. These transgenic models address two fundamental observations which are becoming increasingly important for our understanding of the mechanism of carcinogenesis.