The human embryonal carcinoma (EC) cell line, NEC14 can be induced to morphologically differentiate by the addition of 10(-2) M N,N'-hexamethylene-bis-acetamide (HMBA) in vitro. The expression of several cellular oncogenes (c-onc) in NEC14 cells was examined after induction of differentiation by HMBA. The level of N-myc expression was the highest in undifferentiated cells but decreased transiently to less than 1/10 of the original level shortly after the induction of differentiation. To investigate the role of the transient decrease in N-myc level on NEC14 cell differentiation, a chimeric human N-myc gene in which transcription is initiated at the human beta-actin gene promoter was constructed and introduced into NEC14 cells. Several transformants expressing the exogenous N-myc gene constitutively were established. These transformants showed 10- to 70-fold increases in plating efficiency and shorter population doubling times as compared with the parental NEC14 cells. The transformants were hard to induce, spontaneously differentiated cells on the periphery of cell clusters in culture, unlike parental NEC14 cells, and took longer for HMBA-induced morphological differentiation. The populations of the cells expressing HLA and SSEA-1 antigens increased from 10%-20% to nearly 100% in NEC14 cells after the induction of differentiation, while the populations expressing these antigensincreased only to 50%-60% in one of the transformants, S11. The transformants gained an increased tumorigenic potential in nude mice, and the tumors produced consisted exclusively of EC stem cells. These results suggest that the additional expression of the exogenous N-myc gene (increased about two-fold) confers the more transformed state on the cells.