Three pancreatic beta-cell lines have been established from insulinomas derived from transgenic mice carrying a hybrid insulin-promoted simian virus 40 tumor antigen gene. The beta tumor cell (beta TC) lines maintain the features of differentiated beta cells for about 50 passages in culture. The cells produce both proinsulin I and II and efficiently process each into mature insulin, in a manner comparable to normal beta cells in isolated islets. Electron microscopy reveals typical beta-cell type secretory granules, in which insulin is stored. Insulin secretion is inducible up to 30-fold by glucose, although with a lower threshold for maximal stimulation than that for normal beta cells. beta TC lines can be repeatedly derived from primary beta-cell tumors that heritably arise in the transgenic mice. Thus, targeted expression of an oncogene with a cell-specific regulatory element can be used both to immortalize a rare cell type and to provide a selection for the maintenance of its differentiated phenotype.