The function of several known oncogenes is restricted to specific host cells in vitro, suggesting that new genes may be identified by using alternate hosts. RK3E cells exhibit characteristics of epithelia and are susceptible to transformation by the G protein RAS and the zinc finger protein GLI. Expression cloning identified the major transforming activities in squamous cell carcinoma cell lines as c-MYC and the zinc finger protein gut-enriched Kruppel-like factor (GKLF)/epithelial zinc finger. In oral squamous epithelium, GKLF expression was detected in the upper, differentiating cell layers. In dysplastic epithelium, expression was prominently increased and was detected diffusely throughout the entire epithelium, indicating that GKLF is misexpressed in the basal compartment early during tumor progression. The results demonstrate transformation of epithelioid cells to be a sensitive and specific assay for oncogenes activated during tumorigenesis in vivo, and identify GKLF as an oncogene that may function as a regulator of proliferation or differentiation in epithelia.