The effects of activated ras genes on a continuously dividing, nontransformed, rat liver-derived epithelial cell line have been studied. Genes have been introduced into cells in conjuction with a selectable drug (G418) resistance marker. Controls were obtained by transfecting with the drug resistance gene alone. Transformed, drug-resistant colonies were obtained on transfecting with ras plus resistance marker genes. They had an altered morphology, a tendency to pile up in culture, and showed anchorage-independent growth. They also were tumorigenic in nude mice with a short latent period. None of these properties was exhibited by nontransformed, drug-resistant colonies. Transformed clones were positive on histochemical staining for the enzyme .lambda.-glutamyltranspeptidase. A heterogeneity of .lambda.-glutamyltraspeptidase activity between cells of the same transformed clone was revealed by both histochemical and cytofluorographic assays. Nontransformed clones failed to stain histochemically for the enzyme. The fluorimetric determination of the specific activity of the enzyme showed consistently higher levels in transformed cells as compared to nontransformed, drug-resistant controls. The possible relationship between cell transformation and elevated levels of .lambda. glutamyltranspeptidase is discussed.