A cell line has been established from an alveologenic lung adenocarcinoma that develops in newborn NFS/N mice after i.p. inoculation with a carcinoma-inducing retrovirus. A clonal derivative of this cell line, 3041, forms adenocarcinomas when injected into syngeneic weanling mice and in culture retains several properties typical of alveologenic type 1 cells. These include morphological details, such as tight junctions and interdigitating microvilli in the areas of cell-cell contact, as well as the ability to transport fluid in culture. Fluid transport becomes evident in confluent cultures by the formation of domes or hemicysts. The formation of domes, which is considered to reflect a differentiated function of these secretory epithelial cells, can be enhanced more than 50-fold by treatment with dibutyryl cyclic adenosine 3′:5′-monophosphate but only 5- and 3-fold by sodium n-butyrate and dimethyl sulfoxide, respectively. It is anticipated that the secretory alveologenic cell line 3041 described here will be useful for studies of both its pathological and its physiological properties.