Epidemiological studies of breast and pancreatic cancer in several Mediterranean populations have demonstrated that increased dietary intake of olive oil is associated with a small decreased risk or no increased risk of cancer, despite a higher proportion of overall lipid intake. Experimental animal model studies of high dietary fat and cancer also indicate that olive oil has either no effect or a protective effect on the prevention of a variety of chemically induced tumors. As a working hypothesis, it is proposed that the high squalene content of olive oil, as compared to other human foods, is a major factor in the cancer risk-reducing effect of olive oil. Experiments in vitro and in animal models suggest a tumor-inhibiting role for squalene. A mechanism is proposed for the tumor-inhibitory activity of squalene based on its known strong inhibitory activity of beta-hydroxy-beta-methylglutaryl-CoA reductase catalytic activity in vivo, thus reducing farnesyl pyrophosphate availability for prenylation of the ras oncogene, which relocates this oncogene to cell membranes and is required for the signal-transducing function of ras.