Transgenic technology allows the ability to target regulatory genes to the lungs in a cell-specific fashion. Using this technology, we have generated a model to investigate the phenotypic consequences of targeting oncogenes to particular cell types in the lungs and are developing a second model for the regulated expression of oncogenes in the lung. The transgenic model involves the constitutive expression of simian virus 40 large T antigen in the Clara cells of mouse lungs. This model has been used to investigate changes in expression of cell cycle regulatory genes in the Clara cells during the transformation process, as well as the expression of the transcription factors regulating the expression of Clara cell differentiation markers. The second model we are developing investigates the regulated expression of the genes in the lungs. This system is based on the establishment of two types of transgenic lines. The regulator line consists of a chimeric transcriptional factor placed under the control of a lung-specific SPC (surfactant protein C) promoter. This chimeric regulator is composed of a transcription activation domain, the GAL4 DNA-binding domain, and a truncated progesterone receptor that is responsive to RU 486, but not to endogenous progesterone. The second transgenic mouse line contains the silent target transgene under the control of a minimal promoter with upstream activating sequences (UAS) that are recognized by the regulator transgene. Upon breeding these two lines, the resulting bitransgenic mice can then be induced to express the target transgene only with the administration of RU 486. Two generations of regulators have been evaluated on their ability to regulate the expression of a growth hormone reporter gene. This system demonstrated the inducible expression of the reporter genes in the distal airways of the lungs.