We demonstrate that individual cells infected with and expressing a recombinant retrovirus carrying the Escherichia coli beta-galactosidase gene (lacZ) can be viably stained, analyzed, sorted, and cloned by fluorescence-activated cell sorting based on the levels of lacZ expressed. To accomplish this we have devised a method to enzymatically generate and maintain fluorescence in live mammalian cells. Accumulation of fluorescent products in cells is linear with time, with a direct correlation of fluorescence to enzymatic activity. This technology for beta-galactosidase detection is more sensitive than other available cytochemical or biochemical methods. We have used this procedure to show that the expression of psi-2-MMuLVSVnlsLacZ in the T-cell lymphoma BW5147 and the B-cell hybridoma SP2/0 is not completely stable and that subclones selected by the fluorescence-activated cell sorter for low lacZ activity demonstrate distinctly lower average expression of LacZ. These findings indicate the utility of beta-galactosidase as a reporter molecule at the single-cell level for studies of gene regulation, including studies of promoter efficacy, enhancer activity, trans-acting factors, and other regulatory elements.