Carcinogenesis proceeds in discrete steps involving initiation and promotion. There is ample evidence that the underlying cause of initiation is mutation, whereas for tumor promotion different hypotheses exist postulating the involvement of both epigenetic and genetic changes. DNA repair protects against tumor formation, but it has not been proven whether protection occurs at the level of tumor initiation or promotion. Since the most advanced experimental system for studying multistep carcinogenesis is the mouse skin, we generated transgenic mice that overexpress the human DNA repair protein O6-methylguanine-DNA methyltransferase (MGMT) in their epidermal cells by virtue of cytokeratin (Ck) promoters. Total cellular methyltransferase activity was found to be significantly higher in skin protein extracts of transgenic as compared to nontransgenic mice. CkMGMT transgenic mice along with nontransgenic controls were treated according to the multistage skin carcinogenesis protocol. For initiation, a single subthreshold dose of N-nitroso-N-methylurea (MNU) or 7,12-dimethylbenz(a)anthracene (DMBA) was topically applied to the dorsal skin of the mice. Tumor promotion was carried out by repeated 12-O-tetradecanoylphorbol-13-acetate application. Our results clearly show that CkMGMT transgenic mice are strongly protected against MNU- but not DMBA-initiated skin tumor formation. As compared to nontransgenic controls, transgenic mice exhibited an approximately 6-fold reduction of skin tumor incidence after treatment with 20 micromol or 50 micromol MNU followed by 12-O-tetradecanoylphorbol-13-acetate. These results provide direct and the most compelling evidence to date that the DNA lesion O6-methylguanine is of decisive importance in tumor initiation, and that the protective effect of the repair protein MGMT in carcinogenesis is due to prevention of initiation without affecting tumor promotion.