Chronic inflammation is a significant risk factor for the development of urinary bladder cancer. We showed previously that inflammation induced by killed Escherichia coli strikingly enhanced N-methyl-N-nitrosourea (MNU)-initiated rat bladder carcinogenesis. We also demonstrated a marked increase in several cytokines, including TNF-alpha, in aspirates from bladders treated with killed E. coli. In the present investigation, we tested the hypothesis that TNF-alpha( released during inflammation was causally related to the development of bladder cancer. Using growth in soft agar and tumorigenicity in athymic nude mice as indices of transformation, we examined the effect of TNF-alpha on the enhancement of H2O2-initiated transformation of MYP3 cells; MYP3 is an anchorage-dependent nontumorigenic rat urothelial cell line. We have already demonstrated that H2O2 is a potent transforming agent which is released during the inflammatory process. MYP3 cells pretreated with H2O2 were exposed to TNF-alpha (0 to 100 ng/ml) for 1 week in monolayer culture and were then subjected to growth in soft agar. A marked increase in the number of colonies was observed in the cells that were first treated with H2O2 and subsequently exposed to TNF-alpha, as compared with the untreated control (p < 0.001). In addition, treatment with TNF-alpha alone caused colony formation and was associated with a 6.5-to 8.7-fold increase in intracellular H2O2 (p < 0.001). Addition of an antioxidant, alpha-tocopherol, resulted in a significant reduction in the number of colonies induced by TNF-alpha (p < 0.001). The transformants induced by TNF-alpha have acquired the potential of anchorage-independent growth and tumorigenicity in athymic nude mice. Our results suggest that TNF-a-induced transformation in urothelial cells is due to induction of H2O2, and that this may be one of the mechanisms involved in the carcinogenesis in vivo associated with chronic urinary tract infection.