Cancer is a progressive multigenic disorder characterized by defined changes in the transformed phenotype that culminates in metastatic disease, Determining the molecular basis of progression should lead to new opportunities for improved diagnostic and therapeutic modalities, Through the use of subtraction hybridization, a gene associated with transformation progression in virus-and oncogene-transformed rat embryo cells, progression elevated gene-3 (PEG-3), has been cloned, PEG-3 shares significant nucleotide and amino acid sequence homology with the hamster growth arrest and DNA damage-inducible gene gadd34 and a homologous murine gene, MyD116, that is induced during induction of terminal differentiation by interleukin-6 in murine myeloid leukemia cells, PEG-3 expression is elevated in rodent cells displaying a progressed-transformed phenotype and in rodent cells transformed by various oncogenes, including Ha-ruts, v-src, mutant type 5 adenovirus (Ad5), and human papilloma virus type 18, The PEG-S gene is transcriptionally activated in rodent cells, as is gadd34 and MyD116, after treatment with DNA damaging agents, including methyl methanesulfonate and gamma-irradiation, In contrast, only PEG-3 is transcriptionally active in rodent cells displaying a progressed phenotype, Although transfection of PEG-3 into normal and Ad5-transformed cells only marginally suppresses colony formation, stable overexpression of PEG-3 in Ad5-transformed rat embryo cells elicits the progression phenotype, These results indicate that PEG-3 is a new member of the gadd and MyD gene family with similar yet distinct properties and this gene may directly contribute to the transformation progression phenotype. Moreover, these studies support the hypothesis that constitutive expression of a DNA damage response may mediate cancer progression.