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We have isolated clonal cell lines from a transplanted adenocarcinoma induced by the RIII strain of mouse mammary tumor virus in a BALB/c mouse. Three major morphological cell types of these lines are developmentally linked; polygonal cells give rise to cuboidal and then to elongated cells. All cell lines expressed markers that are characteristic of mammary basal cells. In addition, the polygonal lines contained cells that have cell markers and ultrastructural features of epithelial cells; in these lines an occasional cell was found with myoepithelial features. The cuboidal and elongated lines lacked many epithelial differentiation characteristics and showed no myoepithelial differentiation. The cell lines contained variable numbers of acquired mouse mammary tumor virus and ecotropic murine leukemia virus proviruses. The various subclones derived from the original cell lines contained, in addition to the acquired proviruses of the parental line, one or more unique proviruses of either mouse mammary tumor virus or ecotropic murine leukemia virus origin. These unique insertions were used as genotypic markers to demonstrate the clonal relationship of the cell lines. Both polygonal and elongated cells are tumorigenic and give rise to adenocarcinomas and sarcoma-like tumors, respectively. In contrast, the cuboidal cells are poorly tumorigenic. Since cuboidal cells are derived from the polygonal cells, this suggests that tumor progression in this system proceeds via intermediates that are either poorly or nontumorigenic.