The multistage evolution of squamous cell cancer on mouse skin has provided a model to dissect the biological and genetic changes that contribute to specific stages of carcinogenesis. Keratinocyte cell culture models have been developed that reproduce the genetic and epigenetic events in multistage skin carcinogenesis, and these provide insights into the biochemistry of the process. When the v-rasHa oncogene is transduced into normal mouse keratinocytes, the resultant papilloma phenotype is characterized by a high rate of cell proliferation, an aberrant program of differentiation marker expression, and resistance to terminal differentiation. These changes are attributed to differential effects on isoforms of protein kinase C coupled to activation of the epidermal growth factor receptor. Premalignant progression requires additional genetic changes in the v-rasHa-transduced cells. The acquisition of these changes is suppressed by transforming growth factor beta (TGF beta), and the absence of TGF beta in premalignant tumors indicates a high risk for malignant progression. Keratinocytes that are genetically null for the TGF beta 1 gene rapidly progress to squamous cell carcinomas when transduced with the v-rasHa oncogene. In culture, TGF beta 1 null keratinocytes exhibit a high rate of gene amplification that can be suppressed by concentrations of exogenous TGF beta well below those required to inhibit proliferation. This model is well-suited to identifying critical genetic changes that contribute to premalignant progression.