This study describes the development of a spontaneously transformed human keratinocyte cell line, HaCaT, which retains the ability to differentiate into a structured epidermis when transplanted onto nude mice. HaCaT cells are immortal (>140 passages), exhibit a transformed phenotype in vitro (clonogenic on plastic and in agar), but remain nontumorigenic. Despite their altered growth potential, HaCaT cells maintain normal differentiation capacity, as evidenced by the expression of differentiation-specific keratins (1 and 10) and other markers (involucrin and filaggrin). The HaCaT cell line is the first permanent epithelial cell line from adult human skin that retains normal differentiation potential and is not tumorigenic. DNA fingerprinting confirmed that the HaCaT line is genetically stable and closely related to the original donor. The study also shows that HaCaT cells can be reproducibly transfected with the activated human Ha-ras oncogene, leading to the formation of benign epidermal cysts and/or squamous cell carcinomas in nude mice. The HaCaT cell line provides a valuable model for studying keratinization and the role of oncogenes in malignant transformation. The study highlights the importance of chromosomal stability in human cells and the potential for spontaneous transformation in vitro. The findings demonstrate that spontaneous transformation of human keratinocytes can occur without major defects in differentiation, and that HaCaT cells offer a suitable model for studying the regulation of keratinization in human cells.This study describes the development of a spontaneously transformed human keratinocyte cell line, HaCaT, which retains the ability to differentiate into a structured epidermis when transplanted onto nude mice. HaCaT cells are immortal (>140 passages), exhibit a transformed phenotype in vitro (clonogenic on plastic and in agar), but remain nontumorigenic. Despite their altered growth potential, HaCaT cells maintain normal differentiation capacity, as evidenced by the expression of differentiation-specific keratins (1 and 10) and other markers (involucrin and filaggrin). The HaCaT cell line is the first permanent epithelial cell line from adult human skin that retains normal differentiation potential and is not tumorigenic. DNA fingerprinting confirmed that the HaCaT line is genetically stable and closely related to the original donor. The study also shows that HaCaT cells can be reproducibly transfected with the activated human Ha-ras oncogene, leading to the formation of benign epidermal cysts and/or squamous cell carcinomas in nude mice. The HaCaT cell line provides a valuable model for studying keratinization and the role of oncogenes in malignant transformation. The study highlights the importance of chromosomal stability in human cells and the potential for spontaneous transformation in vitro. The findings demonstrate that spontaneous transformation of human keratinocytes can occur without major defects in differentiation, and that HaCaT cells offer a suitable model for studying the regulation of keratinization in human cells.