We studied induction of cytotoxicity and morphological transformation in C3H/10T1/2 Cl 8 (10T1/2) mouse embryo fibroblasts by soluble and insoluble carcinogenic nickel compounds. Soluble nickel sulfate and nickel chloride caused dose-dependent cytotoxicity in the concentration range from 0.5 microM to 100 microM after 48 hr treatments, but neither compound induced morphological transformation even at concentrations causing up to 94% cytotoxicity. Insoluble nickel subsulfide, nickel monosulfide, and nickel oxide caused dose-dependent cytotoxicity and a low, dose-dependent frequency of morphological transformation in the concentration ranges from 0.5 to 40 microM, 5 to 50 microM, and 50 to 400 microM, respectively, after 48 hr exposure of cells to these compounds. Foci were predominantly of type II morphology; type III foci were rare. The insoluble nickel compounds studied caused no induction of base substitution mutations to ouabain resistance in 10T1/2 cells over concentration ranges that induced morphological transformation. Nickel subsulfide and nickel monosulfide were taken into cells by phagocytosis, since particles were visible in intracytoplasmic vacuoles. Numerous nickel oxide particles were found associated with cells, but true phagocytic uptake was difficult to detect since no vacuoles were observed. We twice cloned type II and type III foci induced by insoluble nickel compounds, established independent cell lines, and characterized their phenotypes. Four of seven of these cell lines had three- to fourfold increased saturation densities compared to 10T1/2 cells, formed type II and type III foci in reconstruction assays, and grew in soft agarose. One cell line induced by nickel oxide formed tumors in nude mice. These data indicate that insoluble carcinogenic nickel compounds induced type II foci in 10T1/2 cells, some of which were tumorigenic, and that the 10T1/2 cell system is suitable for studying mechanisms of nickel compound-induced morphological transformation in mammalian cells.