Formaldehyde induces nonlinear, concentration-related increases in nasal epithelial cell proliferation and squamous cell carcinomas (SCC) in rats. A formaldehyde carcinogenicity study was conducted in which a major end point was correlation of cell proliferation indices with sites of formaldehyde-induced SCC. A poor correlation in certain sites led to incorporation of the number of cells in each site into the correlation. Rats were exposed (6 h/day, 5 days/week) to formaldehyde (0, 0.7, 2, 6, 10, or 15 ppm) for up to 24 months with interim sacrifice time points at 3, 6, 12, and 18 mo. A unit length labeling index (ULLI; S-phase nuclei/mm basement membrane) was determined for specific nasal regions in addition to a population-weighted ULLI (PWULLI). The PWULLI was defined as the product of regional ULLI and total number of nasal epithelial cells in the respective site. Nasal SCC sites of origin were mapped. Formaldehyde induced SCC in a highly nonlinear fashion, with no observed effect at the level of 2 ppm, a minimal response at 6 ppm, and a sharp increase at 10 and 15 ppm. The tumor incidence was 1, 22, and 47% at 6, 10, and 15 ppm, respectively. ULLI was significantly (P < 0.05) increased at 10 and 15 ppm but not at the lower concentrations. There was a good correlation between PWULLI and regional tumor incidence (R2 = 0.88), while the correlation of regional SCC with ULLI was relatively poor (R2 = 0.46). We conclude that target cell population size and sustained increases of cell proliferation in these populations, determined by differences in regional airflow-driven formaldehyde dose to these sites, coupled with the known nonlinear kinetics of formaldehyde binding to DNA, can together account for the nonlinearity and site specificity of formaldehyde-induced nasal SCC in rats.