Double transgenic mice bearing fusion genes consisting of mouse albumin enhancer/promoter-mouse c-myc cDNA and mouse metallothionein 1 promoter-human TGF-alpha cDNA were generated to investigate the interaction of these genes in hepatic oncogenesis and to provide a general paradigm for characterizing both the interaction of nuclear oncogenes and growth factors in tumorigenesis as well as to produce an experimental model to test how environmental chemicals might interact with these genes during the neoplastic process. Coexpression of c-myc and TGF-alpha as transgenes in the mouse liver resulted in a tremendous acceleration of neoplastic development in this organ as compared to expression of either of these transgenes alone. The two distinct cellular reactions that occurred in the liver of the double transgenic mice prior to the appearance of liver tumors were dysplastic and apoptotic changes in the existing hepatocytes followed by emergence of multiple focal lesions composed of both hyperplastic and dysplastic cell populations. These observations suggest that the interaction of c-myc and TGF-alpha, during development of hepatic neoplasia contributes to the selection and expansion of the preneoplastic cell populations which consequently increases the probability of malignant conversion. Treatment of the double transgenic mice with both genotoxic agents such as diethylnitrosamine and IQ as well as the tumor promoter phenobarbital greatly accelerated the neoplastic process. These results suggest that selective transgenic mouse models may provide important tools for testing both the carcinogenic potential of environmental chemicals and the interaction/cooperation of these compounds with specific genes during the neoplastic process.