The stromal microenvironment plays a crucial role in tumor development and progression. One of the most potent activators of stromal cells is the platelet-derived growth factor (PDGF). To investigate the role of PDGF in epithelial tumor development we stably transfected immortal nontumorigenic human keratinocytes with the PDGF-B cDNA. Transfected HaCaT cells overexpressed PDGF-B but remained negative for the PDGF receptors ␣ and  (mRNA). Thus, they did not exhibit autocrine growth stimulation in vitro, but proliferation of cocultured fibroblasts was enhanced and this effect was inhibited by a neutralizing antibody to PDGF-BB. After subcutaneous injection into nude mice the transfected cells maintained high PDGF expression and formed progressively enlarging, rapidly proliferating cysts, classified as benign tumors. During early tumor development (up to 2 months), PDGF-B transfectants induced marked mesenchymal cell proliferation and angiogenesis, yet this effect vanished at later stages (2-6 months) concomitantly with increased epithelial cell proliferation and enhanced tumor growth. These results demonstrate that an activated stromal environment can promote tumorigenic conversion of nontumorigenic keratinocytes by inducing sustained epithelial hyperproliferation. This effect is apparently caused by a dual action of PDGF-BB: (i) PDGF-BB can promote tumor growth by inducing angiogenesis and stroma formation, and (ii) PDGF-activated stromal cells maintain elevated keratinocyte proliferation via a paracrine mechanism. Thus, PDGF, a major factor activated in wound healing, may play an important role as an endogenous promoter in epithelial tumor formation.