Neonatal human prostatic epithelial cells (NP-2s) were transfected by strontium phosphate coprecipitation with a plasmid (pRSV-T) containing the SV40 early region genes. The cells transfected with pRSV-T, but not the sham-transfected controls, formed rapidly growing, multilayered colonies within 2 weeks at a frequency of 1 x 10(-4) in a serum-free medium (P4-8F). In all, 28 colonies of transformed cells were isolated. Three of these have been cultured for a sufficient length of time to show that their growth potentials are well beyond that of the normal progenitor cells (NP-2s). There is also little or no indication of the culture "crisis" commonly seen in SV40-transformed cells in these transfected lines. All contain cytokeratins and SV40 T-antigen as revealed by immunofluorescence, have ultrastructural features of epithelial cells, and are pseudodiploid. None have produced tumors within 1 year after s.c. injection into nude mice. The transformed as well as the parental NP-2s cells require bovine pituitary extract for growth in serum-free medium and are stimulated by transforming growth factor beta 1 (TGF-beta 1) and epidermal growth factor in clonal growth assays. In contrast, a prostatic carcinoma cell line (PC-3) is inhibited by TGF-beta 1. This serum-free system and immortalized transfected clones will be useful for studying the action of putative prostatic carcinogens and tumor-promoting agents.