5-Azacytidine (azaC), a drug that induces decreased methylation of DNA in mammalian cells, was shown previously to induce differentiation of mesenchymal cell types in CHEF/18 cells (Chinese hamster embryo fibroblasts). This paper describes the effectiveness of azaC in inducing tumorigenicity in CHEF/18 cells, previously shown to be nontumorigenic stable diploids. A short exposure of growing cells to 3 microM azaC induced tumor-forming ability in CHEF/18 stem cells. Pre-adipocyte clones and subclones derived from CHEF/18 by prior treatment with azaC were also found to be tumorigenic. Pre-adipocytes previously induced by insulin in the absence of azaC were mostly nontumorigenic, but one clone produced tumors and gave rise to both tumorigenic and nontumorigenic subclones. Karyotype analysis of 41 clones and subclones from azaC-induced and insulin-induced pre-adipocytes revealed a complete correlation between tumor-forming ability and the presence of trisomy for chromosome 3q. In addition, the tumorigenic and tumor-derived lines were demethylated at specific C-C-G-G sites in the preproinsulin, Ha-ras, and Ki-ras genes as revealed by blot hybridization to Msp I- and Hpa II-digested DNAs, whereas the nontumorigenic lines resembled the CHEF/18 controls. This three-way correlation between tumorigenicity, trisomy for 3q, and specific demethylation suggests that decreased DNA methylation may be involved both in differentiation and in tumorigenicity, and that azaC may induce chromosomal aberrations as well as altering DNA methylation.