We have used transgenic mice that carry an activated c-neu oncogene driven by a mouse mammary tumor virus (MMTV) promoter to assess the stepwise progression of carcinogenesis in mammary epithelium. Unlike the stochastic occurrence of solitary mammary tumors in transgenic mice bearing the MMTV/c-myc or the MMTV/v-Ha-ras oncogenes, transgenic mice uniformly expressing the MMTV/c-neu gene develop mammary adenocarcinomas that involve the entire epithelium in each gland. Because these tumors arise synchronously and are poiyclonal in origin, expression of the activated c-neu oncogene appears to be sufficient to induce malignant transformation in this tissue in a single step. In contrast, expression of the c-neu transgene in the parotid gland or epididymis leads to benign, bilateral epithelial hypertrophy and hyperplasia which does not progress to full malignant transformation during the observation period. These results indicate that the combination of activated oncogene and tissue context are major determinants of malignant progression and that expression of the activated form of c-neu in the mammary epithelium has particularly deleterious consequences.