Previous studies from our laboratory have demonstrated that hormone-dependent 7,12-dimethylbenz(a)anthracene-induced rat mammary carcinomas possess only a limited ability to synthesize the mammary gland-specific milk proteins, and this expression of normal differentiated function is limited to a small subpopulation of tumor cells (S. C. Supowit and J. M. Rosen, Cancer Res., 42: 1355-1360, 1982). In an effort to define the molecular defect in hormone-regulated casein gene expression in these tumors, a method has been developed which separates the 7,12-dimethylbenz(a)anthracene-induced rat mammary carcinoma into two subpopulations of cells. Collagenase-dissociated tumor cell suspensions were fractionated by both continuous and discontinuous Percoll gradient centrifugation, and the separated cell populations were analyzed following plating on collagen-coated dishes. Two fractions of differing densities were isolated. The top fraction (rho = 1.05), containing approximately 75% of the dissociated tumor epithelial cells, is depleted in casein-producing cells, while the bottom fraction (rho = 1.07) is enriched 5- to 10-fold in casein-producing cells as assayed by both indirect immunofluorescence, using a specific anticasein antibody, and direct measurement of casein messenger RNA levels. These two subpopulations were further characterized by scanning and transmission electron microscopy, with respect to their cell morphology and ultrastructure, for the presence of hormone receptors; the arrangement of the epithelial cell marker, keratin; and their cell cycle distributions and ploidy. Prolactin, insulin, and estradiol binding were found to be uniform throughout each cell subpopulation and qualitatively similar between fractions. Both fractions appeared to be epithelial-like in morphology, containing numerous surface microvilli as assessed by scanning electron microscopy and containing numerous surface microvilli as assessed by scanning electron microscopy and contained keratin filaments as determined by indirect immunofluorescence. Furthermore, they had similar cell cycle distributions and ploidies of 2n. Differences in cell ultrastructure were observed between these two tumor epithelial cell fractions, reflecting an increased development of rough endoplasmic reticulum in the bottom fraction and a higher concentration of lipid-containing vesicles and free polysomes in the top fraction. The failure of the majority of the cells within the 7,12-dimethylbenz(a)anthracene-induced mammary tumors to produce casein in response to prolactin is not due to a receptor-negative phenotype or general cell type difference.