We constructed a recombinant DNA gene containing sequences from the 5' flanking region of a dexamethasone-inducible rat growth hormone gene linked to the coding region of the polyoma virus transforming protein, the middle-size T (MT) antigen. We used this gene to derive cell lines in which the expression of the MT antigen could be regulated by dexamethasone. We transfected mouse NIH 3T3 cells and isolated transformed foci from cultures grown in the presence or absence of dexamethasone. The frequency of focus formation and the size of the transformed foci were increased in the presence of dexamethasone. Several transformants showed regulated expression of the MT antigen: the levels of polyoma-specific RNA, MT protein and MT-associated kinase activity were increased two- to fivefold in cells grown in the presence of dexamethasone. These results show that 248 base pairs of rat growth hormone DNA, including the first 237 base pairs upstream from the major transcription initiation site, contain promoter activity and a regulatory element required for glucocorticoid induction. This region of the rat growth hormone can be used to regulate expression of the polyoma MT antigen gene. In some cell lines regulated expression of the MT antigen was accompanied by regulated expression of transformed cell growth properties. The minimum level of the MT antigen required for expression of transformation was considerably less than the level found in a polyoma MT-transformed cell line. Increasing the level of the MT antigen led to increased expression of transformation, assayed by morphology, focus formation and growth in agar.