Previous studies have demonstrated a role for the fos gene in promoting malignant conversion of mouse skin tumors. In the study reported here, differential display was performed to identify fos- and jun-regulated genes that are differentially expressed during premalignant progression. Total RNA isolated from variants of the papilloma cell line SP-1 transduced with retroviral vectors expressing v-jun and v-fos alone or in tandem was analyzed for the presence of differentially expressed transcripts by using 35 different primer combinations. Differentially expressed clones were rescreened by dot-blot analysis by using cDNA from chemically induced tumors with a high or low risk of malignant conversion. Three differentially displayed fragments were isolated in this analysis. Homology searches indicated that these fragments shared significant homology with the apoptosis inhibitor bcl-2, human alternative splicing factor/splicing factor 2 (ASF/SF2), and a novel gene not present in the GenBank or EMBL databases. In situ hybridization indicated that the expression levels of the bcl-2 homolog increased with malignant potential in chemically derived mouse skin tumors. A similar analysis indicated that expression of the ASF/SF2 homolog was greater in papillomas than in normal skin or in squamous cell carcinomas. Transcripts for this gene were most abundant in the granular layer. The expression pattern of the third differential display fragment was consistent with that of a tumor suppressor gene. This gene was expressed at very high levels in normal skin and benign papillomas but was essentially undetectable in squamous cell carcinomas. Through this approach, we identified known and novel genes that may contribute to malignant progression in epidermal tumors.