Five families of transgenic mice were derived from one-cell-stage embryos injected with gamma GT-rasT24, a fusion gene consisting of the gamma-glutamyl transpeptidase (gamma GT) 5'flanking region containing promoter I linked to a mutated (codon 12) human H-ras oncogene. The transgene was expressed selectively in the kidneys, eyes, and brains of all families as determined by reverse transcription-polymerase chain reaction, nuclease protection assays, and in situ hybridization. In two of five families, kidney lesions consisting of proximal tubular hyperplasia, renal cysts, and microadenomas developed in male animals; males also expressed higher levels of gamma GT/rasT24 RNA. Early lesions consisted of proximal tubular hyperplasia as defined by alkaline phosphatase histochemistry, gamma GT immunohistochemistry, and electron microscopy and could be correlated with the presence of rasT24 RNA within the cystic proximal tubular epithelium by in situ hybridization. Advanced lesions also involved other segments of the nephron and consisted of cysts lined by a flattened unicellular layer of attenuated epithelium. No rasT24 could be identified within cystic lesions of the distal nephron and collecting tubules by in situ hybridization, and they most likely arise by external compression. Animals from the two transgenic strains exhibiting cystic lesions die of renal failure beginning at 8 months of age. No difference in cell-cycle parameters or DNA ploidy between transgenic and control kidneys was identified by flow cytometric analysis. No renal carcinomas developed. The primary renal effects of the H-rasT24 oncogene in this model system consist of proximal tubular hyperplasia and polycystic kidneys. This model appears to provide a useful in vivo system for the study of ras oncogene function and control of renal cell proliferation.