The mammalian olfactory system provides a useful model to understand the cellular and molecular mechanisms governing the development of the nervous system. The olfactory neuroepithelium undergoes continual turnover in the adult animal, resulting in a neural tissue containing cells at various stages of neurogenesis. We have generated a transgenic mouse line to examine the effects of directed expression of an oncogene within the olfactory neuronal lineage. A hybrid oncogene was constructed utilizing the regulatory elements for the olfactory marker protein gene to direct the olfactory neuronal-specific expression of simian virus 40 T-antigen, a potent oncogene. The resulting transgenic mouse line expressed T-antigen only in olfactory neurons. Ten-month-old transgenic mice displayed significant hypoplasia of the neuronal elements in the olfactory neuroepithelium. The transgenic mice developed neuroblastomas of olfactory neuronal origin at a low frequency. Distinct clonal lines were derived from the primary culture of the tumor. GAP-43, a growth-associated neuronal marker, was expressed by some of the cell lines. One of the cell lines, 2.2, appeared to be responsive to neurotrophic effects from the presumptive target tissue, the olfactory bulb.