Formaldehyde is a nasal carcinogen in the rat but the cancer risk this chemical poses for humans remains to be determined. Formaldehyde induces nonlinear, concentration-dependent increases in nasal epithelial cell proliferation and DNA-protein cross-link formation following short-term exposure. Presented in this review are results from a mechanistically based formaldehyde inhalation study in which an important endpoint was the measurement of cell proliferation indices in target sites for nasal tumor induction. Male Fischer 344 rats were exposed to 0, 0.7, 2, 6, 10, or 15 ppm formaldehyde for up to 2 years (6 hr/day, 5 day/week). Statistically significant increases in cell proliferation were confined to the 10 and 15 ppm groups, which remained elevated throughout the study. The concentration-dependent increases in cell proliferation correlated strongly with the tumor response curve, supporting the proposal that sustained increases in cell proliferation are an important component of formaldehyde carcinogenesis. The nonlinearity observed in formaldehyde-induced rodent nasal cancer is consistent with a high-concentration effect of regenerative cell proliferation of the target organ coupled with the genotoxic effects of formaldehyde. Cell kinetic data from these studies provide important information that may be utilized in the assessment of risk for humans exposed to formaldehyde.