Culturing and comparing the discrete stages of tumorigenesis provide a route to defining important components of the cancer phenotype and, in addition, present the opportunity to establish cell cultures more representative of normal cells than the ultimate malignant cancer cells. Herein we report that preneoplastic foci in one multistep tumorigenesis pathway can be cultured in vitro and show that they preserve distinctive characteristics of the normal cells from which they arose, pancreatic beta cells. In the RIP1-Tag2 line of transgenic mice, which express the simian virus 40 T antigen in insulin-producing beta cells, pancreatic islets develop into vascularized tumors in a multistage pathway. We established conditions for reproducible derivation of beta-cell lines from individual hyperplastic islets that have not yet developed into solid tumors. Most of these cell lines, designated beta HC, release insulin at physiological concentrations of glucose. In contrast to tumor-derived lines (beta TC), which are not properly regulated, the ability of the beta HC lines to respond correctly to glucose correlated with maintenance of normally depressed levels of low-Km hexokinases. Glutamic acid decarboxylase (GAD), an early autoantigen in type I diabetes, was detected in most of the beta HC lines. The relative levels of the two forms of this enzyme (GAD65 and GAD67) varied significantly between the different cell lines, suggesting independent regulation. Class I major histocompatibility complex antigens were detected on the beta HC cells, and the levels of surface major histocompatibility complex expression correlated with their capacity to serve as targets in a cytotoxic T-cell killing assay. The beta HC lines will be of value for studies of beta-cell physiology, autoantigenicity, and tumor development. This work suggests the possibility of culturing preneoplastic stages of other cancers, both to address the mechanisms of transformation and to provide a source of cells that maintain important qualities of their normal progenitors.