Tumors interact with their environment, reprogramming host cells to induce responses such as angiogenesis, inflammation, immunity and immune suppression. To understand these processes, it is important to identify and isolate new genes whose expression is induced in host tissues in response to tumors. Ascites tumors offer an attractive model for isolating such genes, because responding host peritoneal lining tissues can be cleanly separated from tumor cells growing in suspension within the peritoneal cavity. We here report the cloning by differential display of a novel gene, DLM-1, that is highly up-regulated in the peritoneal lining tissue of mice bearing MOT ascites tumors. Mouse peritoneal macrophages, stimulated by IFN-gamma or LPS, also expressed significant amounts of DLM-1. Up-regulation of DLM-1 became evident by 4h after stimulation with IFN-gamma and was not blocked by cycloheximide, suggesting the presence of IFN responding elements in its transcription regulation region. DLM-1 RNA was detected at significant levels in normal mouse lung, intestinal epithelium, liver and thymus by Northern blot analysis. In situ hybridization of MOT and HT-29 mouse subcutaneous transplanted solid tumors revealed strong DLM-1 expression in the host reactive stromal cells, but not the tumor cells. Sequence analysis of the full-length cDNA clone revealed that it encodes a protein of approx. M(r) 44330 with multiple potential protein kinase C and casein kinase II phosphorylation sites. Our data suggest that DLM-1 plays a role in such important processes as host response in neoplasia.